2010 CSR Deutscher Unternehmen in Lateinamerika

8/4/2019 2010 CSR Deutscher Unternehmen in Lateinamerika

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CSR o German Companiesin Latin America


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Impressum:

Published by:

German Global Compact Network

Authors:

Centro de Alianzas para el Desarrollo,

Fernando Casado, Johanna Klein and Steen Schwrer

Design:

Caeine Studio

Report Index

Executive Summary

1 CSR of German Companies in Latin America1 . 1 I n t r o d u c t i o n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1 .2 C SR i n L at in A me ri ca . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.3 German Companies in Latin America-Economic relations and investment . . . . . . . . . . . . . 4

1.4 How are German companies perceived in Latin America? . . . . . . . . . . . . . . . . . . . . .5

1.5 Searching for a Balance - adapting CSR of German companies to a Latin American context . . . . . .6

2 How German Companies manage CSR activities in Latin America

2.1 Implementation status of CSR of German Companies in Latin America . . . . . . . . . . . . . . .7

2.2 Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.3 Labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2.4 Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.5 Anti-corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.6 Stakeholder Engagement and Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2.7 Communication od CSR in the region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

2.8 Social investments and impacting the development goals . . . . . . . . . . . . . . . . . . . 27

3 Towards excellence in sustainability of German companies in Latin America :Conclusions and Recommendations3.1 General conclusions of CSR performance of German Companies in the region . . . . . . . . . . . 32

3.1.1 Human Rights performance of German companies in the region . . . . . . . . . . . . . . 33

3.1.2 Labour Rights performance of German companies in the region . . . . . . . . . . . . . . 34

3.1.3 Environmental performance of German companies in the region . . . . . . . . . . . . . 36

3.1.4 Anti-corruption performance of German companies in the region . . . . . . . . . . . . . 37

3.1.5 Stakeholders performance of German companies in the region . . . . . . . . . . . . . . 37

3.1.6 CSR Communication management of German companies in the region. . . . . . . . . . . 38

3.1.7 Social investments and contribution to local development goals . . . . . . . . . . . . . . 39

3.2 General recommendation towards excellence in sustainability . . . . . . . . . . . . . . . . . 40

3.2.1 Adaptation to the local context and alignment with development goals . . . . . . . . . . 41

3.2.2 Creation of cross-sector partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3.2.3 Integrating CSR and sustainability into the value chain . . . . . . . . . . . . . . . . . . 44

3.2.4 Communication of CSR activities and impacts and stakeholder dialogue . . . . . . . . . . 45

Annex

References


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Chapter I - Introduction | 1

1. CSR of German Companies in Latin America

1.1. Introduction

Te ollowing report analyzes how German Global Compact Companies integrate the CSRpractices ollowing Global Compact principles into their business activities in Latin Ame-rica. It provides strategic recommendations on how companies can maximize their impact

on the triple bottom line in relation to development goals in Latin America.

Te broad acceptance o initiatives such as the UN Global Compact demonstrates thatcompanies are willing to align their operations and strategies to undertake responsibilitiesin the areas o human rights, labour, environment and anti-corruption. However, researchshowed that many companies do not know how to address their corporate responsibilitystrategically in line with the promotion o local development needs and priorities in theregions they are active in.

As a response to these key challenges, the German Global Compact Network proposed anin- depth study o the main challenges and concerns o German companies investing inLatin America, a region characterized by its cultural, social and political diversity and highlevels o inequality. Te main objective o this analysis has been to maximize the potentialGerman companies have enhancing development goals, social cohesion and environmentalperormance in Latin America.

1.2. CSR in Latin AmericaTe growth o civil society, an increasing activity o the state and the need to make LatinAmerican products and services competitive on international markets has had a great im-pact on the transormation o a companys role in society and its CSR practices in the re-gion.

Originally, CSR practices in Latin America were closely related to the practices o philan-thropy, voluntary implementation and corporate donations (nancial and non-nancial)oriented normally towards NGOs and social activities i.


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| CSR of German Companies in Latin America Chapter I - Introduction | 3

nomic, geographical, social and political dierences, as well as within the associative move-mentiv. .

Europe Latin America

Economic Diferences

- Mature economies

- Good inrastructure

- High incomes

- Credible private sector

- High capacity o human resources

- Emerging and subsistence economies

- Isolation o certain sectors, introspective and not

orientated towards internationalization

- High inequality levels that generate instability and

determine consumption patterns.

Geographic and resource-related diferences

- Small territory and dependence on primary

resources rom other regions

- Societies that are consumption-intensive, with

high requirement to save and recycle

- Wide territor y, rich in resources and low population

density

- Less requirement or conservation and less pressure

to promote saving and recycling

- Strong dierences between rural areas and megaci-

ties.

Social and political diferences

- Solid regional policies (health, welare, environ

ment, labour etc.)

- Social pressure to promote good governance

- Stakeholder participation

- Broad and ecient public services

- Long history o political/economical stability

- In some casesInstable p olicies, poor and limited

regarding sustainability

- Little coverage o social welare

- Access to undamental rights is not guaranteed

and the legal system is ragile

- Ineciency tolerated and high level o systematic

corruption.

- High institutional ragility

- High level o insecurity

Diferences in the social movement

- Pressure on governments by interest groups to

promote and guarantee sustainability

-Promotion o CSR on the European level

- Little independence o the social movement

- No independent groups exist that exercise political

pressure or demand CSR actions rom companies

Figure 1 : Dierences that determine CSR in Europe and in Latin Americav

Te arrival o the concept o strategic CSR in Latin America was due to three dierentactorsii :

Te presence o multinational companies with higher standards that orced nationalcompanies to invest in CSR to be more competitive.

Emblematic cases o national companies that suered the consequences o not ha-ving acted in a socially responsible way; with huge setbacks or their reputation andbrands, and their consequent nancial impacts.

Te promotion o CSR, its practices and benets through local and regional organi-zations making CSR a topic o discussion within business organizations, NGOs, themedia and other bodies, adding it to the political agenda and providing ollow- upactivities.

However, studies show that Latin America needs to strengthen the institutionalization oCSR. Good governance can still be improved and generally, the climate or promoting CSRis not very avourable in the region.

Tree general tendencies towards CSR are observed iii:

Tere is relatively low activity in the private sector and most work is implemented viabusiness organizations.

Te implication o governments and the promotion o CSR are relatively low and arenot integrated to the design o development policies. International organizations inthe region are sometimes perceived as promoters o these concepts.

Awareness programmes and the diusion o good CSR-related practices are not very

extended. Te media does not cover CSR related topics as extensively as in otherregions and its integration in universities is still limited

Since one o the major impulses or strategic CSR has been the presence o multinationalcompanies in the region, it is relevant to question i the tools, social management systems,evaluation mechanisms and sustainability reports used by these companies should be iden-tical to those used in Europe.

Te dierences between Latin America and Europe can be divided into various groups. Asillustrated in Figure 1, a recent study dierentiated the two regions according to their eco-


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value o German industrial production in the region. In other words, the total value o theproduction o goods and services by German daughter companies in the region is our timesthe value o German exports into the regionxi.

1.4. How are German companies perceived in Latin America?

Tere are several studies that evaluate how Latin American civ il society considers both Ger-man companies and the country as a whole. Generally they coincide to emphasise its goodreputation and image in the region.

A study o Reputation Institute that evaluates the image o Spain or the rest o the worldand uses Germany as a control group gave the ollowing results:

Germany and its companies have a positive image in most o the areas studied, besi-des cultural appeal and natural environment.

Factors evaluated as particularly positive are related to German companies and theGerman economy, including Products & Services, Brands & Companies, politicaland legal institutions and the economic environment xii .

Te results o a perception study published in the BIELA Barometer o the Image o Spanish Companies in Latin Americaxiii show that overall, German companies have thebest reputation in Latin America in comparison to companies rom other countries (Brazil,Spain, France, UK, Japan, China, US, Netherlands and Italy). Te study was an analysis othe image o Spanish companies in Latin America and used companies rom Germany andother nationalities as control groups xiv.

Germany was rated highest or its economic transparency, labour quality, real inor-mation and environmental responsibility.

Germany was rated above average, although a little less than its overall perception,or its social action and philanthropy, the contribution to the development o thecountry and the creation o employment.

1.3. German Companies in Latin Amrica

Te number o German companies operating in Latin America has been steadily increasingin recent years. In 2008, 1470 German companies were operating in Latin America, gener-ating a turnover o 83.5 billion Euros and employing a total o 419,000 stavi. In the de-cade between 1998 and 2008 the overall share o German FDI in the region was 5% vii .

German FDI ranks third in Latin America, behind investments rom the USA and Spain.Te most important sector or German FDI is the manuacturing industry, accounting oralmost 90% o total German investments in Latin America and occupying the second rankbehind the USA viii.

Activities o German companies in Latin America can be traced back many decades and aconsiderable number o companies have a long tradition o more than a hundred years onthe continent.

German companies can generally be dierentiated rom their competitors in terms o long-term investment perspective. German companies witnessed the economic peaks and troughsin Latin America, but in general maintained their operations in the region ix , and consoli-dated their reputation as reliable partners or Latin American countries.

Tere is a clear trend towards increasing German investments in the region, ater a periodo rare new investments since the 1980s. Moreover, medium-sized companies are consider-ing producing in Latin America as local production acilities are seen as a crucial way toenter into local markets especially in the larger Latin American countries such as Argen-tina, Brazil, Colombia or Mexicox .

Te importance o Latin America or German companies also derives rom the act thatLatin America is the only region outside Europe where German companies occupy key

positions in certain sectors, such as the automobile and car parts, chemical, pharmaceutical,electronic technological, and mechanical engineering industries.

Furthermore, in Brazil, German companies produce around 10% o national industrial pro-duction and in Mexico the gure i s only slightly lower. Tereore, German industrial com-panies are generally market leaders or have a signicant market share.

Latin America is a lot more important or German companies as an industrial base than asa simple trading par tner. German exports into the region correspond to only a quarter o the


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2.1. Implementation status of CSR of German Companies in Latin America

Tis study analyzes the CSR perormance o German companies in Latin America, withspecial emphasis on the implementation status o the 10 Global Compact principles in theareas o human r ights, labour, the environment and anti-corruption (see gure 2).

Human Rights Principle 1: Businesses should support and respect the protection o internationally pro-claimed human rights;. and

Principle 2: make sure that they are not complicit in human rights abuses.

Labour Standards Principle 3: Businesses should uphold the reedom o association and the eectiverecognition o the right to collective bargaining;

Principle 4: the elimination o all orms o orced and compulsory labour;

Principle 5: the eective abolition o child labour; and

Principle 6: the elimination o discrimination in respect o employment and occupation.

EnvironmentPrinciple 7: Businesses should support a precautionary approach to environmental

challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diusion o environmentally riendly

technologies

Anti-CorruptionPrinciple 10: Businesses should work against corruption in all its orms, including

extortion and bribery.

2. How German Companies manage CSRactivities in Latin America

Figure 2: Te Global Compact Prin ciples

Te results o the two studies xv refect the statements given rom experts interviewed andthe participants o the workshop that took place in Bogota on the 3rd o June, 2010. Teyconrmed that German companies have stayed in the region throughout the variable eco-nomic and political ups and downs o the last decades, which alongside the provision ohigh quality products and modern production standards o German companies, constitutedtheir solid reputation as reliable partners or Latin American countries.

1.5. Searching for a balance adapting CSR of German Companies to a

Latin American context

Te act that poverty and inequality are major problems in the region means that there arecertain aspects that do not eature among the CSR priorities in Western countries butshould be o major importance in the relation between companies and society in LatinAmerica.

Research shows that German companies are applauded or implementing CSR wi-thin their internal processes and to encourage sustainable development, in particular

with regards to managing environmental impact, but with less emphasis on advan-cing development in the region.

Human rights, responsibility or the supply chain and compliance beyond local stan-dards were the CSR related topics that experts highlighted as key priorities or theregion.

While it is the direct responsibility o companies to comply with the Global Com-pact principles and to guarantee a maximum positive impact rom their businessoperations, it is crucial to develop a common strategy between all stakeholders witha strong participation o public authorities in order to have an impact on develop-

ment goals. A company cannot perorm successully in a society that is characterized by poverty

and inequality in the long term, and given the specic situation in Latin America interms o the lack o social cohesion, it is o strategic interest to German companiesto participate in strengthening the region and improving social development.

While it is the task o governments to tackle these problems and implement strate-gies or ullling development goals, German companies can contribute by aligningtheir CSR activities to local development priorities and National DevelopmentPlans.


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On the other hand, companies stated that in certain key areas human rights actorswere integrated adequately and regional experts have a positive opinion o Germancompanies integration o such principles (see Figure 3).

A large majority o companies arm they are developing areas such as the integrationo human rights screenings or suppliers (more than 80%) and procedures or how toreact in cases o child or orced labour (more than 75% respectively).

In addition, some companies also conrm they have designed human rights policiesor taking investment decisions (around 65%).

Furthermore, 60% o companies state that they have established procedures on how toreact when the right to exercise reedom o association and collective bargaining maybe at signicant risk and have established the necessary action to support these rights.

Specic policies to ensure respect or the rights o indigenous people is one o theareas least incorporated within the companies analyzed. Almost 40% o companiesconessed they do not integrate such policies, although company representatives alsoemphasised there is very limited contact with the indigenous population, i any.

Figure 3: Implementation o Human Rights Policies in Latin America

Te activities o German companies in the areas o stakeholder engagement, CSR commu-nication, social investment and adaptation to the local context and development goals arealso analyzed, as they are identied as urther key issues to achieve CSR goals.

As dened by European Commission xvi CSR is A concept whereby companies integratesocial and environmental concerns in their business operations and in their interaction withtheir stakeholders on a voluntary basis.

For a more detailed description o the methodological approach, and urther inormation onthe companies and experts interviewed reer to Annex 1.

2.2. Human Rights

Introduction

Human rights is the most universal aspect o the Global Compact whilst being the areawhere companies have the least experience and knowledge. As stated by the director o US-AID in Colombia, Ken Yamashita: Te most important challenge in relation to humanrights is the missing knowledge about the topicxvii .

Human rights impact is in many cases only indirectly linked to internal business operationsand its principles are perceived as the broadest and most dicult to implement.

Major challenges identied by companies are integrating business responsibility within cul-tural contexts with a dierent understanding o human rights and the implementation ohuman rights strategies in environments with a weak legal ramework.

Corporate perormance

In the eld o human rights, the implementation o management systems is thelowest o the our Global Compact areas. O the 44 companies analyzed, at least 57%have a special human rights strategy in p lace. However, only 32% implement measu-res to report complaints in this area.


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0 | CSR of German Companies in Latin America Chapter I - Introduction | 11

Box: Henkel: Compliance Line

2.3. Labour

Introduction

Initiatives to support labour rights through CSR are normally ostered in countries withinexistent or weak legal ramework conditions xviii. CSR activities in labour rights in develo-ping countries need to address many more undamental questions as problems dier greatly.Freedom o association and collective bargaining, or example, may not be ensured by law.

Problems o labour rights in Latin America generally reach beyond the companies own aci-lities. Whilst labour rights may be ensured and promoted within a company and labour stan-dards may be above average, the monitoring o labour rights in supply chain companies is amuch more complex task that needs an additional management approach.

Henkel, a member o the German Global Compact Network, published its globally bindingsocial standards in 2006. Te application o these standards is pursued through presenta-tions, training courses and e-Learning programmes, and compliance is checked by audits inselected sites.

Additionally, a mechanism to report violations anonymously by employees and externalstakeholders has been installed. In 2007, Henkel set up its Compliance Line which is cu-

rrently available in 38 countries. Te hotline is run independently on behal o Henkel by anexternal provider, guaranteeing the condentiality o inormation and preserving the inte-grity o employees.

In Brazil, the Disque Henkel line is operated by an external company, the question is an-swered and the reply is made public, without stating the employees names. Also in Colom-bia, the option o reporting irregularities through the Compliance Line is given.

Te company states in its report, however, that generally very ew complaints are reportedvia the hotline but rather through established internal reporting channels and that directcontact points in the company are used much more requently.

Experts perception

Te positive testimonial o the corporate integration o human rights by German companiesis complemented by the perception regional experts have on how German companies su-pport human rights and avoid complicity in human right abuses (Figure 4).

76% o experts think that German companies support and respect human rights

72% would agree that German companies avoid taking part in human rights violations.

Note o interest

Although only a ew companies implement measures to report complaints in the area, Ger-man companies have successully implemented policies and procedures to address these is-sues. In addition regional experts have a positive opinion o how they are integrated andsupported.

Figure 4 : Perception by regional experts on Human Rights integration o German companies

(%)


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Around 80% o companies conrm their management systems combine working andpersonal lie and integrate their values into promotion/remuneration.

Furthermore, 73% o interviewed companies claim they have procedures or localhiring and the integration o local communities into the workorce.

Additionally, 73% o companies have reaction procedures in cases o orced or com-pulsory labor and measures to contribute to their elimination. (see Figure 6).

However, only 57% o interviewed companies have reaction procedures or situationswhere the right to exercise reedom o association and collective bargaining is at sig-nicant risk, or supporting action established.

Another less incorporated aspect is the integration o human rights protocols in thesupply chain. Only 60% o all interviewed companies ensure their labour standardsalso apply to their suppliers.

During the interviews companies conrmed that implementing Global Compactprinciples guaranteeing reedom o association and the conficts between nationaland German laws and regulations, in particular when related to trade unions, were

Figure 6: Human Rights related to Labor Rights


In terms o the labour perormance o the German companies analyzed, ew o themprovide labour-related data on their operations (working hours, number o accidentsetc.). However, all companies interviewed conrmed the use o systematic manage-ment systems to manage labour relations (see Figure 5).

Around 90% o companies believe they have mutual loyalty with their employeesand that members o the company have a strong team spirit.

More than 90% o companies consider they have an ecient management systemto address diversity and equality and an ecient system to manage occupationalhealth and saety.

Moreover, most companies oer company members the possibility to make sugges-tions (86%) and in more than 75% o the interviewed companies, employees canparticipate in the ormulation o strategy and improvement plans.

Figure 5 : Human Rights related to Labour Rights

(%)


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some o the more dicult aspects. Moreover, the workshop with German companies inBerlin identied the integration and monitoring o local suppliers and the relations withlocal government as major diculties related to labour standards.

Experts Perception

Experts generally have a positive opinion o how German companies integrate aspects o labourmanagement. 90% o them believe German companies work on the elimination o orced andchild labour and more than 76% believe they strongly support reedom o association and collec-tive bargaining (see Figure 7).

More than 90% o experts believe German companies work on the elimination o orced and child

labour.

76% o experts agree that German companies promote reedom o association and collective bargaining.

However, only 64% o the exp erts eel that German companies work on the elimination o discr imina-

tion.

Note o Interest

An issue that generated great debate among corporate representatives and regional expertswas the implementation o the same labour standards in Latin America as in Germany.Companies considered they complied with national and international standards, such as the

World Bank and ILO regulations, although very ew actually provide the same conditions asin Germany. German Company representatives reiterated that the implementation o Ger-man regulations in Latin America is not possible due to the act that laws and regulations inGermany cannot be exported to another cultural and legal context. However the regionalexperts did not share the same opin ion, claiming they had certain expectations that the same

standards were applied in both regions.

2.4. Environment

Introduction

Good perormance and the know-how o German companies on how to reduce environ-mental impact is one o the benets o a strong environmental regulation in Germany.

However, whilst German companies are traditionally strong in managing direct environ-mental impact, there is still a lot to be learnt on how to manage the impact on biodiversityor how to adapt to climate change, especially in more vulnerable communities.

In developing countries, where legal environmental regulations tend to be weaker or notully implemented, it is crucial or companies to comply with, and to voluntarily go beyondthe local standards as a commitment to sustainable development in the country.

German companies have an excellent capacity and experience that enables them to have apositive impact and act as a good example to other companies. As has been stated by BASFin an interview with CSR WeltWeit, Germany has a lot o experience in environmentalissues and they have very good technology. Te German companies in Brazil are very wellrecognized by our population. German companies have much more responsibility to really dothe same as they do outside Brazilxix.

Supporting right to exercisefreedom of association of

collective bargaining

Eliminatedforced labour

Abolish childlabour

Eliminatediscrimination

Disagree Neither-nor Agree

100

90

80

70

0

10

20

30

40

50

60

Figure 7 : Perception by regional experts on labour management o German companies

(%)


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Additionally, an approximate 50% o companies conrmed that the existence o anecient environmental management system is one o their criteria or choosing su-ppliers in Latin America.

Experts perception

Tis inormation contrasts with the regional expert opinion on the integration o environ-mental aspects by German companies (see Figure 9).

80% o experts agree that German companies promote increased environmental responsibility in

Latin America (80%).

Likewise 75% o all experts also agree that German companies apply a preventive ocus on environ-

mental challenges.

In addition, 72% eel that German companies use their competitive advantage in environmentaltechnologies to promote the development and the transer o technology

.

As illustrated, the experts perceive German companies as ecient in promoting envi-ronmental responsibility in the region and applying a preventive approach towardsenvironmental challenges.

Preventive focus onenvironmental challenges

Promote major environmentalresponsibility

Development distribution ofenvironmental friendly

technologies


420

75

416

80

4

24

72

Figure 9: Perception by regional experts on environmental integration o German companies


German companies in Latin America generally show good perormance in integra-ting environmental standards into their operational business activities (see Figure8).

Almost 80% o all participating companies stated that their company has an ecientenvironmental management system in place, and 72% have a monitoring system tomeasure compliance with environmental regulation in Latin American countries

Furthermore, at least 77% have a measurement system or environmental impact and66% implement a strategic plan to reduce environmental impact xx.

On the other hand, German companies generally perorm weaker in areas related totheir surrounding environment and the external impact o their operations.

For example, only 40% o companies have dened strategies on how to manage im-pact on biodiversity (although a number o companies oresee development in thisarea)

Environmentalregulations in

Germany

Environmentalmanagement system

in place

Environmentalmanagement system

criterion forchoosing suppliers

Strategies on howto manage impacts on

biodiversity in place

Monitoring system tomeasure compliancewith environmental

standards


100

90

80

70

0

10

20

30

40

5060

Figure 8: Implementation status o environmental Global Compact Principles

(%)

(%)


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2.5. Anti-Corruption

Introduction

Anti-corruption is regarded as the most dicult o the Global Compact areas to implementand overall perormance is still unsatisactoryxxi. Corruption is a major challenge or compa-nies operating in developing countries, and some companies complained that reusing co-rruption in certain cultural environments lead to economic disadvantages or more dicultmarket access.

Troughout Latin America, corruption is a major challenge and weak institutions, poor go-

verning practices and the excessive infuence o private interests continue to undermine thebest eorts to promote equal and sustainable development xxi Most Latin American coun-tries have a very poor rating or corruption, and only Chile and Uruguay score over 5 out o10, indicating a air perormance.


German companies consider corruption as one o the major challenges when inves-ting in Latin America and it is an issue all consider crucial when dening theirbusiness strategy (see Figure 10).

Figure 10: Implementation o anti corruption policies

Corruption receives

specialatten tion in

Latin America

Anticorruption rules

also apply to supply

chain

System to

anonymously

denounce

corruption


100

90

80

70

0

20

30

40

50

60

Te two aspects with the biggest potential or improvement are the management oimpact on biodiversity and the application o environmental criteria or choosing su-ppliers in the value chain.

In addition, it is noteworthy that there was a considerable dierence in env ironmen-tal management between larger companies with a longer history in the region andthose with smaller operations in Latin America. Due to their size and experience thelatter tend to integrate less environmental aspects in their line o operations.

Note o interest

Tere seems to be a certain discrepancy o perception over the extent to which German com-panies apply the same environmental regulations and standards as in Germany. While 65%o companies state that they apply the same regulations, regional experts believe that compa-nies in the region do not integrate the same environmental aspects as in Germany. Interviews

with corporate representatives conrmed this situation, stating that the key challenges inthese areas were the poor enorcement o local environmental laws and the diculty oapplying western environmental standards to the region without losing competitiveness inthe market.

Located close to one the BASF production sites near So Paulo, Brazil, the Espao ECO Founda-

tion promotes sustainable development through the transer o know-how and technology in the

areas o eco-eciency, environmental education and reorestation. Te oundation was created in

2005 as a Public-Private Partnership between the German member o Global Compact BASF, the

GZ and local partners and is the rst Excellence Center o Applied Sustainability in Latin Ame-

rica.

Companies (and other interested organizations) are oered the possibility o an eco-eciency stu-

dy that assesses the environmental and economic impacts o products, processes or services throug-

hout the lie-cycle and provides the argument or including environmental eciency aspects intocompany decision-making.

Environmental education programmes are carried out or small and medium-sized enterprises as

well as with BASFs own employees, and reorestation activities are undertaken in protected natural

areas and in the urban environment.

Operating as an independent organization, the oundation is able to create and maintain good rela-

tions with dierent groups o interest, and also acilitates the dialogue between BASF and its stake-

holders. Te oundation is nancially sel-supporting and has already broken even.

Further inormation: http://www.espacoeco.org

Box: BASF: Espao Eco Foundation

(%)


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68% o experts would like to see companies working in a more comprehensive way against corrup-

tion, in all its orms (including extortion and criminality).

64% o all experts see anti- corruption as one o the priorities o CSR in German companies.

Note o interest

Corruption was not considered among the major recommendations or improvment in Ger-man companies and generally German companies are considered as value oriented andtransparent in business operations.

Figure 11: Implementation o anti corruption policies

Should work against corruption in allits forms, including bribbery and

criminality

Internal governance and anti-corruptionis a priority


1220

68

12 16

64

Te large majority o companies has implemented global anti-corruption guidelinesthat apply to Latin America, and 86% state that the issue o corruption receives spe-cial attention in the region.

Companies rate their personal perormance on anti-corruption ver y highly; the ma-jority o interviewed companies (93%) declare that their anti-corruption system isecient and that the internal mechanisms to ght corruption are well known to allemployees.

80% o the interviewed companies state that anti-corruption rules also apply to the

supply chain demonstrating the relevance o the topic in Latin America, as this is theonly GC principle where the supply chain has been integrated systematically by the

vast majority o companies.

Furthermore, analysis o CSR reports shows that at least 75% o the 44 analyzedGlobal Compact member companies have anti-corruption guidelines in place (codeso conduct, business conduct guidelines etc.) and 61% report the provision o a sys-tem o anonymous denunciation related to corruption, via telephone, internet or anexternal ombudsman.

However, in spite o the positive consideration German companies have on the issue, thecurrent relevance o the topic is due to bad experiences in the past. Previous corruption scan-dals in certain companies have encouraged them to react proactively and according to repre-sentatives, has led to the establishment o a positive anti-corruption system and extensivetraining possibilities or employees.

Experts perceptionAs was the case or the other three Global Compact principles, experts generally considerthat German companies are addressing anti-corruption measures correctly, although some

were o the opinion that more should be done to address all aspects, including extortion andcriminality (see Figure 11).

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Furthermore, over 80% o companies interviewed consider that transparency is a keyeature o business relations with stakeholders, and to know and meet the needs andrequirements o communities in the areas surrounding their operations, and thereore,consider it essential to promote collaborative relationships with their stakeholders

However, there are many areas in stakeholder management that German companiescan improve and both the companies and the regional experts agreed it is an area thatshould be managed more ormally, as well as incorporating standardized mechanismsor relationship building. Te ollowing assertions were revealed by the research study:

40% o companies have no ormal channels o dialogue with their stakeholders

Only 50% o companies in the region share their knowledge and experience in CSRwith other companies and interested organizations

45% o companies have not implemented benchmarking activities among their stake-holders to improve CSR perormance

100

90

80

70

0

20

30

40

50

60

Various channels

of dialogue with

stakeholders

Shares knowledge

and experience in

CSR with others

Benchmarking activities

to improve performance

in CSR

Buys products and

services from local

suppliers

Relations with its

stakeholders are

based on trust

Promotes

collaborative

relationships

with stakeholders

Transparency with

other stakeholders

Concerned to

know and meet needs

of communities

CSR in development

of goods and services

CSR crucial in

relations with suppliers

10


Figure 12: Relation o German Companies with stakeholders

2.6. Stakeholder engagement and Partnerships

Introduction

Stakeholder and cross-sector partnership management have become an essential aspect odaily business activities, and companies that excel in their sectors all share the common ea-ture o developing an ecient management procedure to deal with stakeholders throughstrategic partnerships.

Te only way to eciently impact development goals is by orging synergies and promoting

partnerships or development with the dierent relevant stakeholders. Tis situation hasspecial relevance in Latin America due to the great challenges o social cohesion (LatinAmerica still maniests the highest levels o inequality in the world) and the large numbero organizations and platorms dedicated to CSR and similar issues.

As well as business associations like Forum Empresa or the Business Council or Sustaina-ble Development in Latin America (BCSD), there has been a growing trend towardssocial and academic associations dedicated to promoting awareness and evaluating CSRaspects in the region.


In relation to stakeholder management and the creation o partnerships among Ger-man companies in Latin America, the research revealed that companies do not havea standardized system o managing stakeholders and that they normally ollow amore inormal approach. However, most companies agreed that it was o cruc ial im-portance to understand stakeholders interests in the region and that the tendency

was to ormalize and standardize their relations with key stakeholders.

All interviewed companies admitted that it was crucial to base their relations withstakeholders on mutual trust

In addition, more than 80% o companies conrmed that whenever possible, pro-ducts and services were sourced rom local supp liers

(%)


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are acing this challenge, and emphasize the need o strengthening trust between partners tocreate a ertile ground or possible collaboration.


Interviews with German companies revealed that there is a broad division in terms o thestrategic approach they are adopting concerning CSR communication (see Figure 13).

54% o companies interviewed considered communication as a powerul tool, essen-tial or corporate strategy and a key aspect to engage stakeholders in an open dialo-gue, to have constant eedback and to establish an interactive relation with society.

However, the other 46% considered that communication was not that relevant anddid not have a specic strategy to create direct communication with stakeholders.

In addition, 60% o companies stated that a change in their communication strategywould not make any signicant dierence to their business operations.

Te lack o prioritization o a CSR communication strategy in the region is conrmed withthe act that only 8 out o the 44 companies analyzed have either published a CSR report inLatin America or a report available in Spanish or Portuguese. Interviews with corporate

Not important

Important

100

90

80

70

0

20

30

40

50

60

10

Is CSR Communicationimportant?

Would a change onthe communicationstrategy be positivefor your company?

Figure 13: Relevant aspects concerning CSR communication o German

companies

2.7. Communication of CSR in the region

Introduction

Strategic communication is an important instrument to synchronize companies goals withthe expectations o society and to guarantee coherence and consistency between a company s

declarations and action, internally and externally.

Te need or responsible communication is gradually becoming more recognised as anopen and dynamic process integrating the roles o transmitter and receiver with the com-plementary purposes o persuading and learning

Cultural and social change in Latin America i.e. changing consumer demands and anincreased awareness among society o companies and their responsibilities requires anadapted approach in the communication o CSR. Multinational companies in particular

Te German Global Compact member company chibo is a ounding member o the 4CAssociation, an association in which coee producers, trade and industry and civil societyare involved. Ocially ounded in 2006, 4C works towards greater sustainability in the co-ee sector worldwide. Te association was initiated by a partnership between the publicsector and the coee industry in Germany, with the GZ as the implementing agency. Teassociation has since then grown ar beyond the German context and today brings togetherpartners rom all around the world.

In Latin America, the 4C association holds regional oces in Nicaragua and in Brazil. Bra-

zil also hosts a Sustainability Forum in which the dierent actors in the Brazilian coeesector exchange experiences and dene the uture strategic direction o the 4C Associationin the country.

A code o conduct, rules o participation or trade and industry, support mechanisms orcoee armers, a verication system and the participatory governing structure are the basiso 4Cs work to promote sustainability in the coee se ctor.

Further inormation see: http://www.4c-cofeeassociation.org

chibo: 4C Association

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Note o interest

It can be concluded that there is a gap between the current communication patterns o Ger-man companies and the expectation with regards to communication rom the experts. WhilstGerman companies generally give relatively little importance to communicating or publis-hing the results o CSR activities in Latin America, CSR experts in the region expect themto do so, and to adapt their messages to the Latin American context. Te Colombian-Ger-man chamber o commerce oers the possibility to publish inormation on the activities oCSR in the region, but stated that only one German company has used this ser vice.

2.8. Social investments and impacting the development goals

Introduction

In general, companies that contribute to social causes on a regular basis have historically beensomewhat reluctant to get too close to the organizations they support. One o the main ears

was the negative publicity generated in those cases where programs do not work or do notgenerate the expected results.

However, given the growing complexity o global challenges, companies are increasingly re-quested to provide solutions to such challenges, and there is an evolutionary trend to integra-te these aspects in the corporate strategy and core operations. Tis situation is specicallyrelevant in Latin America, the region with the highest levels o inequality, and including 10out o the 15 most unequal countries in the world.


In the case o German companies operating in the region, the research revealed thatwhilst the implementation o the Global Compact Principles is managed globally inmost o the companies, local activities and projects are unctioning rather indepen-dently rom the headquarters and are implemented ollowing the individual needsand motivations o local subsidiaries.

representatives revealed that publishing a CSR report on their activities was neither a prio-rity nor considered a relevant issue.

Experts perception

Experts believe German companies should communicate much more and should publish aCSR report in Spanish i they are operating in the region (see Figure 14).

As illustrated, only 25% o experts believe the CSR communication o Germancompanies to be adequate or the region

More than 90% believe German companies should broaden their communicationwith stakeholders and other groups.

Furthermore over 90% believe German companies should communicate their CSRactivities and impact more and 84% believe they should publish a CSR report inSpanish or Portuguese.

Communication ofCSR adequate for IA

Shouldcommunicate more

Should publish aCSR report in

Spanish/Portuguese

Should widencommunication with

stakeholder group


100

90

80

70

0

20

30

40

50

60

10

Figure 14: Relevant aspects concerning CSR communication o German companies

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Experts perception o corporate perormance on social investments and their impact ondevelopment goals

As mentioned earlier, one o the biggest priorities in the region o Latin America is to en-hance the contribution rom the private sector towards development objectives. While ex-perts agreed that German companies are supporting the ormation and training o proessio-nals and generating quality employment, they stated that the support to the social cohesiono the region, contributing to reaching the Millennium Development Goals or enhancinglocal and national development plans was not part o the priorities o German activities andimpacts in these areas were not as high as they would expect. (see Figure 16)

68% o experts agreed that German companies generate quality employment and 60%that they invest in capacity building o proessionals

However, only 20% would agree that they contribute to the social cohesion o the re-gion or development plans and only 36% that they contribute to the achievement othe MDGs.

In addition, experts also stated that they considered knowledge was lacking on how to adaptCSR strategies to local conditions and on how to act in avour o local development (seeFigure 17).


In many cases, headquarters are not necessarily always inormed about social pro-jects that are being implemented locally. Tis applies especially to those companiesthat have a strong international presence, where normally companies provide gene-ral guidelines on the ocal areas to be implemented, but do not ollow up individualprojects and spending, or even leave the decision on social projects completely toemployee initiatives.

O the 44 analyzed Global Compact member companies, inormation on social investmentswas obtained rom 32 companies through published reports, inormation on corporate we-bsites and conducted interviews (see Figure 15).

O the 32 companies that provided inormation, at least 46% have made socialinvestments in relation to children and at least 44% to education.

Investments in environmental projects have been made by at least 40% o the com-panies.

34% undertake or have undertaken investments to promote health and 31% areactive in volunteering activities.

Investments promoting art and culture are carried out by at least 22%, the samepercentage as or investments promoting projects with disabled people.

0

20%

30%

40%

50%

10%

Children

Education

Volunteering

Art/Culture

Disabled

Environment

Health



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Note o interest

During the expert workshop in Colombia, it was emphasized that German companies otendo not understand the need to invest in social development in the region. It was debated thatGerman companies would ideally need to integrate their CSR activities and social inves-tments to National Development Plans to create synergies with government programmesand to increase transparency o programmes with other actors, as well as to avoid duplicatingeorts and unds.

Missing knowledge on local necessities and how to operate or a positive impact ondevelopment are the two areas identied as the main obstacles to adapt the CSR oGerman companies in Latin America (both rated with 68%)

Te lack o knowledge regarding stakeholders is also considered a signicant obsta-

cle (60%)

Other obstacles identied are the lack o dialogue with stakeholders, public supportto co-nance projects and the act that impact on development is not a priority orGerman companies.

Figure 17: Major obstacles to the development o adapted CSR strategies in Latin America


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German companies are generally considered ecient in the implementation ointernal standards that can be easily transerred rom the German to an internatio-nal context, such as OHS or environmental management systems. Tey are lessactive in those areas that require an adaptation to the local context or externalactors.

CSR experts rom Latin America saw the major strengths o German companies inthe internal perspective o their CSR activities. Areas such as environmental mana-gement, quality management, technology transer and the implementation o ethi-cal codes and codes o conduct are seen as key strengths o German CSR activities.

In addition, German companies are perceived as having a positive perormance inimplementing labour codes, deending and promoting human rights and creatingmechanisms to prevent corruption.

German companies are seen as weaker in the areas o social and philanthropicaction and their impact towards development goals in the region. Te latter can beconrmed by the general perception rom other studies, such as BIELA, and romthe opinions o the companies inter viewed during the course o the study.

Another general weak point o German companies is the integration o their CSRactivities through the supply chain. Te challenge o integrating CSR towards thesupply chain has been identied or all our areas o the Global Compact andcompany representatives agreed that it is one o the main areas that need to beimproved.

3.1.1. Human Rights perormance o German companies in the region

In general, it can be stated that German companies have successully implemented policiesand procedures to address human rights issues. Experts in the region have a positive consi-deration on how companies are integrating human rights issues in their line o business andensuring there is no participation or toleration or human rights abuse.

Based on the results o the analysis conducted throughout the rst three chapters, and a sur-vey among CSR experts rom dierent countries in Latin America, the ollowing chapter

summarizes the main conc lusions derived rom the research, and provides strategic recom-mendations on how German companies could improve their perormance towards excellen-ce in sustainability and CSR.

3.1. General conclusions of CSR performance of German companies in

Latin America

German companies with a presence in Latin America greatly vary in size, type osector and years present in the region. While a number o companies can look backover a history o one hundred years, others have recently initiated operations in thelast ew years. Also companies vary rom SMEs to large multinationals that operatein several countries. Such characteristics will infuence how CSR is integrated.

In most cases, CSR is managed centrally with a strong ocus on local and regionalimplementation. While in most o the companies the implementation o the GlobalCompact Principles is streamlined internationally through codes o conduct, mana-gement systems and minimum standards, country subsidiaries are responsible or the

implementation o social projects.

At least 86% o the 44 companies analyzed have dierent types o managementsystems in place that provide the possibility to ollow-up the implementation oGlobal Compact Principles. Most o the management systems are managed globallyand only very ew companies report additional systems specically adapted to theLatin American context.

3. Towards excellence in sustainability ofGerman Companies in Latin America:conclusions and recommendations


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Positive Perormance

Te relations between employees and companies are generally qualied as good.Companies believe they are loyal to their employees and conrm the existence o anecient management system to address diversity and equality, and an eectivesystem to manage occupational health and saety.

In addition, companies recognized the use o established management systems thatbalance a working and personal lie; have procedures or local hiring and the inte-gration o local communities in the workorce; and reaction procedures in cases o

orced or compulsory labour.

Most companies oer company members the possibility to make suggestions andhave established procedures or them to participate in the ormulation o strategyand improvement plans.

Key Challenges

Te main areas o improvement are to establish reaction procedures or a situationwhere the right to exercise reedom o association and collective bargaining may beat signicant risk (ew companies admitted having such procedures).

Another key area is the integration o more detailed labour codes and standards inthe supply and distribution chain.

Furthermore, as is the case or environmental perormance, another key challenge is

the implementation o the same labour standards in Latin America as in Germany.Experts expressed this as a relevant issue or the region. However, company repre-sentatives elt that the same labour procedures were not possible due to the act thatlaws and regulations in Germany are unable to be exported to another cultural andlegal context.

Positive perormance

Most German companies working in Latin America perorm human rights scree-nings or suppliers (80%) and have reaction procedures or cases o child or orcedlabour (75%).

A considerable majority o companies (65%) declare to have designed policies orhuman rights when taking investment decisions and have established procedures onhow to react when the right to exercise reedom o association and collective bargai-ning is at signicant risk. (60%)

Key challenges

One o the key areas o improvement or German companies is the need to developspecic policies to ensure the rights o indigenous people and other minorities arerespected in the decision-making process o their line o business.

Additionally, the development o specic human rights protocols independent ocorporate labour codes has also been identied as a key challenge or improvement.

Te integration o human rights protocols and specic procedures, alongside rsthuman rights screening within the supply chain and distribution channels is ano-ther challenge identied that could generate a positive social impact in the region.

3.1.2. Labour Rights perormance o German companies in the region

In general German companies consider they have good practices integrating labour stan-dards, and regional experts similarly expressed a good opinion o German perormance inthese issues. Although ew companies provide labour-related data on their operations (wor-king hours, number o accidents etc.), all conrmed the use o systematic management sys-tems to manage labour relations.


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3.1.4. Anti-Corruption perormance o German companies in the region

German companies consider corruption as one o the main challenges when investing inLatin America and it is an issue that all companies consider crucial when dening theirbusiness strategy. Given certain recent cases o corruption, it is a very sensitive issue.However, regional experts consider that German companies are addressing anti-corruptionmeasures correctly and their reputation is positive in this respect.

Positive perormance

Most companies consider their anti-corruption system to be ecient and that inter-nal mechanisms to ght corruption are well known to all employees.

Moreover they ensure the implementation o global anti-corruption guidelines orLatin America and provide a system o anonymous denunciation that can beapplied via telephone, internet or an external ombudsman.

Key challenges

Given the delicate situation o corruption in the region, and ollowing the opiniono experts and CSR practitioners, it is expected that German companies work in amore proactive way against corruption and become an active voice denouncing allits orms.

As is the case in the other Global Compact areas, another key challenge is to applyanti-corruption measures to the supply and distribution chain o businesses.

3.1.5. Stakeholder management and partnership building o German companies

German companies do not have a standardized system o managing stakeholders and nor-mally ollow a more inormal approach orging partnerships or development. Companyrepresentatives conrm they value the relevance o understanding stakeholders interests inthe region but procedures to create an open dialogue with them are not well established. Tis

3.1.3. Environmental perormance o German companies in the region

German companies in Latin America believe they have a good perormance in integratingenvironmental standards into their operational business activities, and experts consider theypromote environmental responsibility and apply a preventive approach towards environ-mental challenges.

Positive perormance

Most companies believe they have an ecient environmental management systemor Latin America (almost 80%) and a monitoring system to measure compliance

with environmental regulation in Latin American countries (around 72%).

Furthermore, many have a measurement system to quantiy environmental impact(77%) and implement strategic plans to reduce the same (66%).

In general, German companies are seen to promote positive environmental respon-sibility, with a preventive ocus on environmental challenges, and use their competi-tive advantage in environmental technologies to promote the transer and develop-ment o technology.

Key Challenges

One o the key challenges identied to potential improvement in this area is

applying a specic strategy to address the impact on biodiversity and integrate itwithin business operations.

Another key challenge to potential improvement is applying environmental criteriawhen selecting suppliers in the value chain.

Experts highlighted that the same environmental standards should be applied to theoperations in Latin America as in Germany to generate a positive impact in theregion.


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Positive Perormance

Approximately hal o the companies interviewed consider communication is apowerul tool, essential or the corporate strategy and a key aspect to engage stake-holders in an open dialogue.

Key Challenges

Experts believe German companies should communicate much more and shouldpublish a CSR report in Spanish i they are operating in the region

However, 46% o companies stated communication was not that relevant and there isnot a specic strategy in place to create direct communication with stakeholders. 60%elt that a change in the communication strategy would not bring any signicantchange to their business operations.

Also, corporate representatives declared that publishing a CSR report on their activi-ties was not a priority (only 8 out o the 44 companies have published a CSR reportor the region).

3.1.7. Social investments and contribution to local development goals

One o the biggest priorities in Latin American is to enhance the contribution o the priva-te sector towards development goals. While experts agreed that German companies are su-pporting the ormation and training o proessionals and generating quality employment,they stated that their support to the social cohesion o the region, contribution in reachingthe Millennium Development Goals or enhancing local and national development plans

were not developed to the level required. Expectations rom society in this respect weremuch higher than the results achieved. It is thereore considered one o the most importantareas or German companies to improve in the region.

Positive Perormance

German companies are recognized as generating quality employment and investingproductively in the capacity building o proessionals.

is one o the areas where there is a need or improvement to achieve excellence in sustainabi-lity and social responsibility.

Positive Perormance

All companies interviewed consider i t crucial to base their relations with stakehol-ders on mutual trust and mention transparency as a key eature o business relations

with other stakeholders.

Companies also state that they are concerned to know and meet the needs andrequirements o communities living near their operations, and thereore, they consi-der it is essential to promote collaborative relationships with its stakeholders

Additionally, they mention that wherever possible they buy products and ser vicesrom local suppliers.

Key challenges

An obvious challenge is or German companies to ormalize and build more stake-holder management and partnership by incorporating standardized mechanisms orrelationship building and ormal channels o dialogue.

Another key challenge is to increase the knowledge o the needs and requirements ostakeholders and perorm benchmarking activities to promote ecient partnershipsand improve CSR perormance.

Additionally, there is a request rom the region to engage German companies in sha-ring their knowledge and experience in CSR with other organizations in order tocreate a common know-how that is benecial to the social development o the region.

3.1.6. CSR Communication management o German companies in the region

Tere is a broad division among German companies in terms o adopting a strategic appro-ach to CSR communication. Some consider it a very relevant and crucial aspect. Others be-lieve it is not an essential aspect or their perormance in the region.


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Communication o CSR activities and impacts and stakeholder dialogue

3.2.1. Adaptation to the local context and alignment with development goals

Latin America is a highly diverse region that has experienced important changes over the lastew years. Political, socio-economic and cultural dierences do not only exist between thedierent countries, but also within each country independently. Te CSR strategies o Ger-man companies need to be adapted to the Latin American reality.

In general adaptation also means a more social ocus than German companies are used to.High inequality, a lack o social security and the lack o coverage o other basic needs in com-munities surrounding companies operations or even between the amily members o the

work orce, all reinorce the necessity to increase social projects aimed at solving basic deve-lopment needs.

Almost all companies analyzed made social investments to improve areas such aseducation, child support or environment.

Key Challenges

German companies are seen to contribute ver y little to the social cohesion o the re-gion and their impact with regards to development goals or MDGs is much lowerthan expected.

Companies are also perceived as not integrating their CSR strategies into NationalDevelopment Plans and as not creating synergies with government programmes orother actors to avoid duplicating eorts and unds.

Tere is the eeling that German companies lack knowledge regarding local necessi-ties or the way to operate or positive impact on development.

3.2. General recommendations towards excellence in sustainability

Tese sets o recommendations refect on the role that a German socially responsible com-pany should play in the region and highlights the possible priorities or promoting economicgrowth aimed at providing better social cohesion and improved local development.

Te ollowing our areas have been highlighted as o crucial importance to promote exce-llence in sustainability and CSR or the region (see Figure 19):

Adaptation o CSR activities to the local context and alignment with regional andlocal development goals

Integration o the value-chain when promoting sustainability and CSR in the region

Creation o multi-sector partnerships with public, private and civil society organiza-tions

Figure 19: Recommendations towards excellence in sustainability


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o ensure that this does not lead to mere philanthropic projects with little long term impactand sustainability or to the duplicity o eorts and unds with other actors rom governmentor NGOs, it is necessary to align social p rojects with international development goals and tointegrate them into national development plans.

o align CSR activities to a broader local context, it is necessary to thoroughly analyze thelocal context, as well as existing government programmes and projects with the aim o im-proving the coverage o basic social and environmental services, especially at a local level. Agap analysis o the positioning o the companys activities within the regional context canhelp to identiy personal strengths and areas where the CSR strategy can be adjusted to

reach higher impact.

An in-depth understanding o community needs and demands is a urther requirement oreective CSR implementation. Te identication o vulnerable groups such as indigenouscommunities or marginalized groups o the population is necessary to address the mostpressing social issues and to guarantee the best possible impact.

Tis process will lead to greater integration in the local territory/region and to a more stra-tegic support o local development plans and other aspects to develop local municipalities indierent areas.

Recommended steps or adapting CSR to the l ocal context

1. Identiy national or local development plans and other relevant ocial reports thatdene key national needs (National Development Plans, MDGs national report,

World Banks PRSPS, etcetera)

2. Perorm a needs evaluation assessment o the region and identiy development goalslinked to business activities the company is interested in.

3. Perorm interviews with stakeholders to identiy possible active partners in theprocess o local CSR adaptation

4. Design a strategy to link business operations and activities in the country with the

CSR strategy and the development goals the company has selected

5. Create an open dialogue with key local stakeholders to receive eedback and integra-te them in the design and ormulation o the CSR strategy

3.2.2. Creation o cross-sector partnerships

Te improvement o development impact is not possible with just one organization and canonly be maximised through cooperation with other actors rom the private and public sectorand civil society. Possible partners are maniold and reach rom other companies, via local or

national governments, national and international NGOs or organizations. As mentionedbeorehand, there is a wide number o possible actors and organizations in Latin America topartner. Strategic partnerships are crucial to adapt the companys CSR strategy to its specicregional context.

German companies prot rom partnerships by gaining knowledge and insight into the localsituation. Local partners can help in evaluating the existing CSR activities o German com-panies and their impact, and play an important role in the implementation o CSR program-mes.

German- Latin American chambers o commerce, as well as the local GZ oces can be avaluable entry point when dening local partnerships and adapting CSR strategies to thelocal context. Both organisms have made a name in promoting sustainability and social co-hesion in the region and can provide a number o important contacts and experience in thearea.

Recommended steps or building partnerships

1. Identication o development goals and key priorities o CSR strategy

2. Map and identiy key actors and organizations with relevant mandates that mightcontribute to the same social goals and their appropriate selection.

3. Create common agreement on the purpose and objectives o the partnership

4. Elaborate a map o resources and dene the unctioning structure o the partnership


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5. Dene the implementation o the action plan and a road-map considering all thedierent phases.

6. Design a communication strategy including internal and external aspects o thepartnership

7. Establish a management ramework or identiying risk alerts and confict resolu-tion procedures

3.2.3. Integrating CSR and sustainability into the value chain

One o the aspects dened as a major challenge during the research, and outlined by bothGerman company representatives in Latin America and CSR experts, is the integration osocial and environmental aspects into the value chain to improve the impact o CSR activi-ties. German companies should support the ormalization o work and promote the concepto dignied employment throughout the whole value chain. Tis would include incorpora-ting design, production, marketing, distribution and support services rom suppliers up tothe nal consumer. Additionally local communities should be integrated in dierent opera-tional areas o the companies. Te integration o these concepts and the guarantee o decentemployment have huge potential to improve the our Global Compact principles in com-pany operations.

In order to enhance this integration, it is requently necessary to provide capacity building,training and technology transer to companies and the communities they are working with.

Te latter should guarantee quality standards o products and services and other proessionalneeds, but certain social aspects need to be inc luded to increase their relevance.

Recommended steps or CSR and sustainability in the regional value chain

1. Dene the lie-cycle o the production process that categorizes all phases o thevalue chain.

2. Identiy core community groups and local SMEs that might pa rticipate in specicphases

3. Analyze the socio-economic situation o local communities and identiy training

needs and capacity-building requirements to ully engage them in the value chainand its economic processes.

4. Elaborate an engagement strategy or the local communities and SMEs that consi-ders the pace and levels o engagement

5. Establish a monitoring and evaluation system or tracking results and expectations

3.2.4. Communication o CSR activities and impacts and stakeholder dialogue

German companies should ocus more on adapting their communication strategy or CSRactivities to the Latin American context. As outlined in previous chapters, German compa-nies are well known or their products, technology and know-how, but are perceived as undercommunicating their CSR strategy and their social and environmental impact. A broaderand more adapted communication strategy would give German companies a leading role inproviding good examples and practices o CSR and enable the exchange o relevant experien-ces.

A continuous and open dialogue with stakeholders is seen as a prerequisite to better adaptCSR strategies to the local context and its necessities. Stakeholders should be integrated inthe design, implementation and evaluation o CSR strategies.

Aspects to be considered when dening a CSR communication strategy

1. Maintain an open, honest, transparent and respectul attitude, listening to partners,nding out their needs and understanding their views and demands.

2. Be prepared or continuous learning and improvement through the internal andexternal communication process and dialogue with engaged parties.

3. Build trust, which is an intangible asset and whose construction requires time andintegrity. As indicated above, it requires keeping an open mind and open learningprocess with partners and employees.

4. Become aware o the development challenges and needs o the region and establisha communication strategy according to those needs.


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Annex

Phase one

Preliminarystate of the

art

In-depthinterviews

with Latin

American

Stakeholders

In-depthinterviews

with German

Companies

Phase two Phase three Phase four Phase ve Phase six

Stakeholderworkshops

in America

Latina

Presentation

and

discussions

of nal results

of the study

Final results

and report

Annex 1 : Methodology

Te results o the study are based on in-depth research as outlined in Figure 1. Empiricalresults o the study are based on research o all Global Compact companies with a presencein Latin America, as well as on questionnaires and interviews with CSR experts rom die-rent Latin American countries. A workshop was conducted in Colombia and involved ex-perts rom dierent elds, as well as rom dierent Latin American countries.

Preliminary state o the art

Tis was composed o interviews with expert practitioners, secondary source research and

analysis o general trends o CSR in Germany, as well as Latin American perceptions o Ger-man investment in the region.

Questionnaires and in-depth interviews with Latin American Experts

Te study perormed primary research to evaluate the perception o Latin America expertstowards German companies and German investments in the region. Te countries analyzedare the ollowing: Brazil, Argentina, Chile, Mexico, Colombia and Peru. A questionnaire has

Figure A1-1: Methodological phases o the study

been sent out to a broad number o key experts rom government, NGOs, international or-ganizations and private organizations on how they perceive German Companies and theirCSR activities, as well as on their expectations towards them. Additionally in-depth inter-

views with selected key experts took place.

From a total o 123 questionnaires sent to relevant experts, 25 answered the questionnaire.Also, it is noteworthy to mention that a total o 26 stated that their knowledge concerningCSR practices o German companies in the region was not sucient to dierentiate thebehaviour o German companies rom other multinational or local companies.

As it can be appreciated, 28% o experts belong to Colombia, 20% to Argentina, 16% toBrazil, 12% to Peru and Mexico respectively, and 4% to Chile. Te remaining 8% belong toregional organizations (see Figure A1-2).

On the other hand, relevant experts are either CSR proessionals or work in relevantuniversities and research institutes, chambers o commerce, international organizations orgovernments dealing with CSR related issues (see Figure A1-3).

Figure A1-2: Percentage o experts rom diferentLatin American countries


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In-depth analysis o German companies

In order to analyze the current status and strategies or German Global Compact membercompanies in the region, a questionnaire was designed. Selected companies were provided

with the questionnaire beorehand by e-mail and were asked to assign a responsible ocerto conduct a phone intervi ew.

Te CSR activities o all 44 companies with activities in Latin America were analyzed andin-depth interviews were conducted with 19 o the 44 companies. All companies that wereanalyzed are considered big companies, although number o employees and countries in

which they operate in the region vary signicantly. As it can be appreciated, 25% o thecompanies analyzed have more than 100.000 employees and only 14% have less than 5000(see Figure A1-4).

Figure A1-3: Percentage o experts per sector group In addition, German Global Compact member companies in Latin America represent avariety o dierent sectors, such as industrial technology and engineering, chemical industry,automotive industry, consumer goods and nancial services to name just a ew (see FigureA1-5).

Figure A1-4: Number o employees (global) o the 44German Global Compact companies in Latin America

Figure A1-5: :Distribution o Global Compact Companies inLatin America by sector


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Te interviews analyzed two dierent areas: on the one hand, the implementation status othe Global Compact principles in Latin America, and on the other, CSR activities and stra-tegies, as well as current partnerships and stakeholder management o the companies.

Besides the interviews and the analysis o the companies activities, a kick-o workshop wasorganised on November 3rd in Berlin. Te workshop took place during the Global CompactNetwork Meeting and was directed at German companies investing in or interested in inves-ting in developing countries. Te main objective o the workshop was to obtain a rst impres-sion o where the major challenges with regard to strategic CSR lie and how German com-panies can improve their development impacts in developing countries.

Stakeholder workshop in Colombia

Te objective o the workshop was to contrast the results o the analysis o the questionnaireand the in-depth interviews, as well as to identiy major challenges or German Companiesrelated to a strategic CSR in the region. Te workshop took place on July 1st in Bogot, Co-lombia.

Te workshop was divided in two parts, while the morning was dedicated to CSR expertsdiscussing possibilities on how to improve CSR; the aternoon ocused on business organi-zations and companies. It was organized as an open debate about possible means to improvethe situation and challenges that companies are acing in Latin America and especially inColombia.

Annex 2 : Results o Perception Analysis in German Companies in Latin America

Products and Services

Brands and companies

Growth potential

International respect

Social Welfare

Political and legal Institutions

Economic development

Cultural

appeal

Naturalenvironment

Mxico

Argentina

Chile

Brazil

-20 -10 10 20 30 40 50 600

Figure A2-1 : Perception o Germany (Source :Reputation Institute)


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Other countries

Chinese

Italian

North American

Brasilian

French

English

Spanish

Japanese

Dutch

German

4,43

4,56

5,56

5,97

6,03

6,11

6,27

6,28

6,46

6,58

6,88

Environmental Responsibility

Figure A2-2 :Environmental Responsibility o German Com-panies in Latin America (average score on a scale rom 1-9)

Other countries

Chinese

Italian

Brasilian

French

Japanese

Dutch

English

German

North American

Spanish

Social Action and Philantrophy

4,4

4,54

5,41

5,99

6,07

6,11

6,17

6,4

6,41

6,53

6,69

Figure A2-3: Social action and philanthropy(average score on a scale rom 1-9)

Other countries

Chinese

Italian

Dutch

French

Brasilian

English

German

Japanese

Spanish

North American

5,59

5,31

5,63

5,8

5,93

6,12

6,15

6,54

6,61

6,93

7,23

Contribution to the developmentof the country

Figure A2-3 Contribution to the development o the country(average score on a scale rom 1-9)

Other countries

Chinese

Dutch

Italian

French

Brasilian

English

German

Japanese

Spanish

North American

Contribution to the creationof employment

5,62

5,31

5,73

5,75

5,98

6,07

6,2

6,53

6,56

7,15

7,51

Figure A2-4: Contribution to the creation o emplyment(average score on a scale rom 1-9)


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Reerences

BDA/BDI (2001): Stellungnahme der Bundesvereinigung der Deutschen Arbeitge-berverbnde (BDA) und des Bundesverbandes der Deutschen Industrie (BDI) zumGrnbuch Europische Rahmenbedingungen r die Soziale Verantwortung derUnternehmen vorgelegt von der Europischen Kommission

http://www.csrgermany.de/www/csrcms.ns/id/2AEEE8B680B88F35C1256F2B00330E9A/$le/Stn_CSR-dt.pd

Casado, F. and Roser, I. (2009): La RSE de la empresa espaola en Amrica Latina.CeALCI Fundacin Carolina. Documento de rabajo n 34.

CERCAPAZ (2010): Derechos Humanos un reto y responsabilidad tambin delSector Privado.

http://www.cercapaz.org/index.shtml?apc=g--4--&x=796. Accessed on August 2nd,2010.

Chong, A., Izquierdo, A., Micco, A. and Panizza, U. (2003): Corporate Governanceand Private Capital Flows to Latin America, IADB Research Department WorkingPaper.

http://www.iadb.org/res/publications/publes/pubWP-482.pd

CSR WeltWeit (2009): Interview with Gislaine Rossetti, Head o South AmericaCorporate Communications, BASF Brazil.

http://www.csr-weltweit.de/leadmin/inhalte/Dossier/Ecogerma_2009/Interview_GislaineRossetti_nal.pd

Economic Commission or Latin America and the Caribbean (ECLAC) (2009):Foreign Direct Investment in Latin America and the Caribbean. Brieng Paper.

http://www.eclac.org/publicaciones/xml/4/36094/LCG2406i.pd

European Commission (2001): Promoting a European ramework or CorporateSocial Responsibility. Green Paper. COM(2001) 366.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2001:0366:FIN:EN:PDF

German Federal Bank (2010): Bestandserhebung ber Direktinvestitionen. Statis-ti

2010 CSR Deutscher Unternehmen in Lateinamerika

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