Miller Csr
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Transcript of Miller Csr
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Corporate Social Responsibility
Concepts, key issues, context
Key CSR drivers
Implications for enterprise
Implications for development
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Main Concepts of CSR
Social Contract (Donaldson, 1982; Donaldson and Dunfee,1999) There is a tacit social contract between the firm andsociety; the contract bestows certain rights in exchange forcertain responsibilities.
Stakeholder Theory (Freeman, 1984) A stakeholder is any groupor individual who can affect or is affected by the achievement of anorganisations purpose. Argues that it is in the companys strategicinterest to respect the interests of all its stakeholders.
CSR (Carrol, 1979)Firms have responsibilities to societies including economic, legal,
ethical and discretionary (or philanthropic).- See also DeGeorge (1999) on the Myth of the Amoral Firm
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Main Concepts of CSR
CSR = political economy
The rights and responsibilities assigned to private
industry.
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Key Issues in CSR Labour rights :
child labour forced labour right to organise safety and health
Environmental conditions
water & air emissions climate change
Human rights cooperation with paramilitary forces
complicity in extra-judicial killings Poverty Alleviation
job creation public revenues skills and technology
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Context Globally
Liberalisation of markets reduction of theregulatory approach
Emergence of global giants, consolidation ofmarket share
Development of the embedded firm and theglobal value chain
Development of supplier networks in developingcountries
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Key drivers of CSR
Around the world NGO Activism
Responsible investment
Litigation
Gov & IGO initiatives
Developing Countries Foreign customers
Domestic consumers
FDI
Government & IGO
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Key Drivers: NGO Activism
Facilitators: IT (espInternet), media, low costtravel
Boycotts, brand damage,influence legislation,domino effect
e.g. Shell in Nigeria, Exxon
in Cameroon, Sinopec inSudan, Apparel Industry(Nike, Gap), GMO, WoodProducts, etc.
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Key Drivers: Responsible Investment
Roots of: South Africa ApartheidDivestment
Significant size: US SRI = 2.3trillion $ in 2005 or 10% of allprofessionally managed investments
Shareholder activism: shareholderresolutions; voting process
Influence corporate reporting and
disclosure requirements New rules on CSR reporting
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Signatories will 1 incorporate ESG issues into investment analysis and
decision-making processes.2 be active owners and incorporate ESG issues into our
ownership policies and practices.3 seek appropriate disclosure on ESG issues by the entities in
which we invest.4 promote acceptance and implementation of the Principles
within the investment industry.5 work together to enhance our effectiveness in implementing
the Principles.6 each report on our activities and progress towards
implementing the Principles.
Principles for Responsible Investmentwww.unpri.org
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18.5%
81.5%
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Asset owners. Do you expect to implement ESG policies inyour emerging market investments?
Investor opinion survey (IFC)
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Foreign Direct Liability
Alien Tort Claims Act (ATCA): humanrights, environmental rights
o Unocal Burmao Coca-Cola Columbia
o Rio Tinto Papau New Guinea
o Del Monte Guatemala
o The Gap Saipan
o Shell Nigeria Other tools: RICO, False Advertising
E.g. Saipan sweatshop cases; Katsky v. Nike
Key Drivers: Litigation
$30,000,000 settlement
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United Nations Initiatives
UN Global Compact UN Principles for Responsible Investment UNEP Equator Principles ILO Tripartite Declaration of Principles
concerning Multinational Enterprises andSocial Policy (MNE Declaration) UNHCHR Business and Human Rights UNODC Anti-corruption
UNCTAD Corporate ResponsibilityReporting, World Investment Report
http://www.ilo.org/public/english/employment/multi/tripartite/declaration.htmhttp://www.unepfi.org/http://www.unpri.org/ -
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Implications for Enterprises
The Extended FirmRegional Plants / JV Partners
Suppliers / Distributors
New social and product liabilitypatterns
Development of Codes ofConduct and CSR reporting
Expanding sphere of influence Application of Code of Conduct to
value chain
CSR management: value chainmanagement = compliancemanagement
CSR Drivers
Transnational Corporations
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Implications for Enterprises:TNC as an organ of society
every individual and everyorgan of society [should]promote respect for theserights and freedoms and tosecure their universal andeffective recognition. - UNInternational Declaration of Human Rights
Internationalprinciples apply onlyto governments
Internationalprinciples apply togovernments and companies
It would be a strange tort systemthat imposed liability on state actorsbut not on those who conspiredwith them to perpetrate illegal actsthrough coercive use of state power. - 1997 Eastman Kodack Co. v. Kalvin
Trend in in ternat ional law
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Implications for Enterprises:CSR Management
How do companies address socio-environmental &legal compliance issues?
Policies - Code of Conduct Systems - Compliance Management
Reporting - Accounting and Reporting
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CSR Management:Systems approach
Sustainable business development does not comeabout of its own accord. Rather, commitment tosustainability demands that corporate processesbe reliably controlled and that everyone's actions -
in finance as much as in environmental and socialareas - be coordinated. Prerequisites for this arebinding guidelines, unambiguous corporategoals and a clear organizational structure .
- Deutsche Telekom
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CSR Management:Management structure
Example: Chiquita
Board of Directors
President & CEO
GroupPresidents
Chief FinancialOfficer
VP of HumanResources
GeneralCounsel
CorporateResponsibility
Officer
SteeringCommittee
Audit Committee ofBoard
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CSR Management:Plan, Do, Check, Act method
Plan Consult stakeholders
Establish code of conduct
Set targets
Do Establish managementsystems and personnel
Promote code compliance
Check Measure progress
Audit
Report
Act Corrective action
Reform of systems
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Code of Conduct:Widespread adoption among TNCs
Adoption of More than half of the 100 largestfirms by global revenue (FortuneGlobal 100)
More than a third of the 100 largestfirms by foreign assets (UNCTADWIR 100)
57% of all foreign assets
51% of all foreign sales
65% of all foreign employees
Multi-Sector 7% Technology
17%
Services20%Light Industry
17%
Heavy Industry27%
Not Specified12%
Codes found amongall industrial sectors.
Source: OECD 1999survey of 233 codes
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Code of Conduct:Issue emphasis varies by industry
0 20 40 60 80 100
Multi-Sector
Technology
Services
LightIndustry
HeavyIndustry
% of Codes addressing issue
Environment
Fair Employment &Labour RightsRule of Law
Fair Business Practices
Source: OECD 1999survey of 233 codes
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Code of Conduct:Emerging consensus on key issues
Source: Conference Board 1999,Survey of 123 Codes
0% 25% 50% 75% 100%
Human rights
Confidentiality of personal information
Community relations
Political activities
Workplace safety
Antitrust
Sexual harassment
Environment
Giving gifts
Discrimination / equal opportunity
Receiving gifts
Security of proprietary information
Conflict of interest
Bribery/improper payments
% of codes addressing issue
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Code of Conduct:Cascade effect
82%
50%
34%
22%
0%
25%
50%
75%
100%
Company Contractors Sub-contractors
Customers
a s
% o
f a
l l c o
d e s s u r v e y e
d
Source: OECD 1999survey of 233 codes
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Code of Conduct:Cascade effect
Source: Conference Board 1999,Survey of 123 Codes
0% 10% 20% 30% 40% 50%
Nepotism
Child labor
WhistleblowingPolitical activities
Human rights
Workplace safety
Sexual harassment
Discrimination / equal opportunity
Environment
Conflict of interest
Bribery/improper payments
Receiving gifts
Giving gifts
% of COE applying to JV partner or Supplier/Vendor
JV Partners Suppliers/ Vendors
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Sphere of Influence
W h o is to be influenced?
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Sphere of Influence
What i s su es a re to be in f luenced?
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Sphere of Influence
How a re thos e i s sues to be in f luenced?
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Sphere of InfluenceExample: Mattel
Who: sup p l ier s , JVs and b ranch p lan t s
Wh at: OSH
How: focus o n manufac tu r ing p rocesses , HR, fac to ry des ign
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CSR Management:Governing the value chain
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Compliance Management:Management by certification
ISO 14000 by Region
Europe
Far East
N. America
Aust./ NewZealand
S. America
Africa/ W. Asia
Introduced 1998
By 2005: 763 factories,47 countries
Introduced 1995
By 2002: 37,000 factories,
112 countries
SA 8000 by Region
Asia
Europe
N.
AmericaS.
America Africa
http://www.sa-intl.org/ -
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Compliance Management:Management by certification
ISO 26000: Social Responsibility
To be Introduced in 2009 or 2010
NOT a Management System (?)
NOT a Certifiable Standard (?)
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Principles of SR1. Ethical behaviour 2. Respect for rule of law3. Respect for international norms of behaviour
4. Respect for and considering of stakeholder interests5. Accountability 6. Transparency
7. Precautionary approach 8. Respect for human rights
Organizational Governance
H u m a n R i g
h t s
L a b o u r P r a c t i s e s
E n v i r o n m
e n t
F a i r o p e r a t i n g
p r a c t i s e s
C o n s u m e r i s s u e s
C o m m u n i t y & s o c i e t y
d e v e
l o p m
e n t
Core Subjects Implementing SR
7.2Defining scope
7.5Implementing in daily practise
7.7Evaluating performance
7.8Enhancing credibility
7.4Integrating into organization
ISO 26 Roadmap
7.3 Working With Stakeholders
7.3 Communicating
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CSR Management:Supply chain specific
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CSR Management:CSR reporting becomes mainstream
% of Large Firms Issuing a CSR Report
64%
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CSR Management:Emerging standards in CSR Reporting
Global Reporting Initiative (GRI) A multi-stakeholder initiative www.globalreporting.org
International Standards ofAccounting and Reporting (ISAR)
A project of UNCTADwww.unctad.org/isar
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Implications for Development
CSR cascade effect on members of theglobal value chain labour conditions (e.g. OSH, right to
organise, wages) environmental controls
transfer of new managementtechniques
Compensation for weak legal environmentin LDCs
Impact on economic development &national competitiveness???
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l f l
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Implications for Development:CSR management
CSR performance among 100 emerging market enterprises
Source: UNCTAD, 2008
Countering Bribery overall
0%
20%
40%
60%
80%
100%
Policy Systems Reporting
intermediate limited no evidence
l f l
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Implications for Development:CSR management
CSR performance among 100 emerging market enterprises
Source: UNCTAD, 2008
Human Rights overall
0%
20%
40%
60%
80%
100%
Policy Systems Reporting
intermediate limited no evidence
I li i f D l
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Implications for Development:is CSR good for growth?
[CSR] is liable to hold back the development of poorcountries through the suppression of employment opportunitieswithin them.
David Henderson
[CSR]s adoption would reduce competition and economicfreedom, and undermine the market economy.
I li i f D l
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Implications for Development:Experiments in quantification
R2 = 0.6079
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
30 35 40 45 50 55 60 65 70 75 80
National Corporate Res ponsibility Index (2003 Score)
L a b o
r C o s
t p e r w o r k e r
i n m a n u
f a c t u r i n g
( $
p e r y e a r
, 1 9 9 0
- 1 9 9 4 )
Indonesia Costa Rica
Does an increase in CSR correspond with anincrease in labour costs?
I li i f D l
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Implications for Development:Experiments in quantification
Does an increase in CSR correspond with adecrease in real GDP growth?
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
30 35 40 45 50 55 60 65 70 75 80
National Corporate Responsibility Index (2003 Score)
R e a
l G D P G r o w
t h A v g e r a g e
1 9 9 1 - 2
0 0 1
China
Turkey
New Zealand
Thailand
Russia
Ireland
Indonesia