Trends in Csr

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TRENDS IN CSR

Lecture in Good Governance

& Responsible CitizenshipJanuary 2009


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Potential benefits of implementing

a CSR approach1. Better anticipation and management of an

ever-expanding spectrum of risk. Effectivelymanaging governance, legal, social,

environmental, economic and other risks canimprove the security of supply and overallmarket stability.

2. Improved reputation management.

Organizations that perform well with regard toCSR can build their reputation, while those thatperform poorly can damage brand andcompany value when exposed.


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Potential benefits3. Enhanced ability to recruit, develop and retain

staff. This can be the direct result of pride in

the companys products & practices, or of

introducing improved HR practices.

4. Improved innovation, competitiveness an

market positioning. Drawing feedback from

stakeholders can be a rich source of ideas for

new products, processes and markets,

resulting in competitive advantages.


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Potential benefits5. Enhanced operational efficiencies and cost

savings. These flow from improved efficienciesidentified thru a systematic approach tomanagement that includes continuous

improvement.6. Improved ability to attract and build effective andefficient supply chain relationships. Largerfirms can stimulate smaller firms with whomthey do business to implement a CSRapproach. (e.g. some apparel retailers requiretheir suppliers to comply with worker codesand standards.


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Potential benefits

7. Enhanced ability to address change. A firmwith its ear to the ground thru regularstakeholder dialogue is in a better position to

anticipate changes & trends.8. More robust social license to operate in the

community. Improved citizen and stakeholderunderstanding of the firm and its objectives

and activities translates into improvedstakeholder relations, which would in turntranslate to enduring public, private and civilsociety alliances.


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Potential benefits

9. Access to capital. When making decisionsabout where to place their money, investorsare looking for indicators of effective CSRmanagement.

10. Improved relations with regulators. In someareas, govts. have expedited approvalprocesses for firms that have undertaken CSRactivities.

11. A catalyst for responsible consumption.Changing unsustainable patterns ofconsumption is seen as an important driver toachieving sustainable development.


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Financial market opinionThere is a growing body of evidence thatcompanies which manage environmental, social

and governance risks most effectively tend todeliver better risk-adjusted financial performancethan their industry peers. Jean Frijns, Chief

Investment Officer, ABP, 2004The consideration of material social &

environmental issues should be a part of everyfinancial analysts normal work. Not only doesthis make sense from an investment risk

perspective; institutional clients are increasinglyasking for better integration in fundmanagement. Thomas Albrecht, Dir. Of Research,Credit Suisse Asset Management, 2004


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KEY TRENDS & ISSUES IN CSR

1. Viewing CSR in a broader and more systemiccontext.

2. The enabling role of government.

3. The relative efficacy of regulatory and

voluntary approaches to CSR issues.4. Exploring the linkages, and often

inconsistencies, between a companys CSR,corporate governance & public policy

positions.5. Developing a more strategic and integrated

value proposition for CSR at the level of thefirm.


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KEY TRENDS AND ISSUES

6. The leadership role of CEOs andBODs.

7. The potential collective CEO action

8. The role of media as watchdog,endorser and multiplier.

9. Measuring the impact &

effectiveness of CSR & partnerships.10.Scaling-up the impact of

partnerships.


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1. Viewing CSR in a broader

and more systemic contextCSR is most usefully understood not merely interms of what individual companies choose to

do, or are able to do, but as a systemic

expression of the broader context andgovernance frameworks in which business

operates, and the various market, public policy,

and stakeholder drivers that shape this context.

(CSR needs to be seen in the context ofGovernment, NGO, and media accountability

and transparency).


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2. Enabling role of government

CSR initiatives reflect voluntary actions done bycompanies to compensate for governance gapsat the local, national, and international level.These gaps may result from inadequate

governance structures and institutions, weak orunderresourced public capacity, lack of politicalwill, bad governance, etc.)

Institutions such as the WB group and Intl.

Business LeadersF

orum are studying the roleof government in creating an enablingenvironment for CSR.


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3. Relative efficacy of regulatory and

voluntary approaches to CSR issues

Public financing and procurement structures aregood examples of initiatives that are voluntary inthat they are not a blanket legal requirement forall enterprises. They are mandatory for any

company wanting to get access to public financeand government contracts.

Another is the integration of social andenvironmental criteria into the membership

requirements of certain business networks,multistakeholder coalitions, and even trade andindustry associations.


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4. Exploring linkages, and inconsistenciesbet. a companys CSR, corporate

governance, and public policy positionsCSR in some companies remains firmly

inside a PR or philanthropy silo, and all too

often sits at odds with positions that the

company takes on its lobbying, political

donations, public policy issues, and other

govt. relations activities.


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5. Developing a more strategic and

integrated value proposition for CSR

at the level of the firmThere is a need to support further empiricalresearch on the causal links between goodethical, social and environmental performance&good financial performance or shareholder

value. There is a need to understand thelinkage bet. CSR & the following corporatevalue drivers:

1. Integrated risk management

2. Intangible assests: innovation, reputation,alliances, and intellectual capital

3. New market or business opportunities orserving underserved or emerging mkts.


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6. Leadership role of CEOs and BODs

The leadership of CEOs and their

willingness to speak out in public or

complex business issues such as

international trade devt. assistance,

poverty, HIV/AIDS, climate change,

human rights, multilateralism, role of UN,

agricultural subsidies, and social andenvironmental impacts of trade policies,

IPR, and new technologies.


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7. Potential of collective CEO

actionCollective business leadership can occur on

a geographic or industry sector basis, or

around specific social, ethical or

environmental challenges, such as

corruption, etc. The CEO-led alliances are

referred to variously as business

leadership coalitions, public purposebusiness coalitions, and CEO leadership

networks.


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8. Role of the financial sector in redefining

risk, opportunity and fiduciary responsibility

The financial sector (includes the institutionalinvestors, stock exchanges, insurers, bankers,and rating agencies) is seen as one of the keypotential game changers in shifting CSR from a

marginal to more mainstream business issue. Ifmandated by govt. regulations, guidelines orincentives, the financial sector could have amajor impact in the coming decade.

Fiduciary - relating to the relationship between atrustee and the person or body for whom thetrustee acts.


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9. Role of media as watchdog,

endorser and multiplier

The media was seen as a key driver inensuring greater corporate accountability serving as public watchdog by

investigating & reporting on examples ofbad corporate behavior, or exposinginconsistencies between corporatestatements and actions. It can also have amultiplier effect on raising publicawareness about CSR issues.


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10. Measuring the impact and

effectiveness of CSR & Partnerships

Performance measurement was seen as

necessary for ensuring greater accountability

and transparency with external stakeholders, as

well as making a sound business case for CSRinternally. One challenge associated with the

drive to develop measures & standards for CSR

is the rapid and confusing growth in different

measurement systems, standards, and codes.


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11. Scaling-up the impact of

partnershipsScaling-up means creating rules that apply tomany organizations.

The most common enablers to change marketsand scale-up beneficial impacts of partnershipsor individual CSR activities:

1. Government actions (govt. incentives,regulatory instruments)

2. Corporate value or supply chains (leads to

greater scale and sustainability for their CSRactivities and partnerships across borders)


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Most common enablers

3. Collective corporate action thru businessleadership coalitions focused on a specificCSR issue, industry sector or geography.

4. Market mechanisms such as social andenvironmental certification and labellingsystems, emissions and environmentaltrading schemes, and stock exchangelisting requirements.

Trends in Csr

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