Miller Csr

8/13/2019 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



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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



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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

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