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CSR and Development Panel Ian Jones Project Leader and Research Associate Centre for Business Research University of Cambridge Visiting Academic Fellow, Henley Business School 1 A Social Capital approach to MNEs to developing country engagement • Social capital in developing countries – ‘features of social organisation, such as trust, norms and networks, that can improve the efficiency of society by facilitating co-ordinated actions.’ Robert Putnam (1993) – Social relationships are key to facilitating successful development. Michael Woodcock (2000) • Typology of external relationships – Scope – Person to person, vertical, institutional – Structure (Form): Networks, boundary crossing – Cognitive(Form): Cognitive: Competence/Goodwill • Studied MNE best practice corporate citizenship projects 2 High Social and Environmental Impact Projects Youth Business International (Diageo) International partnership programme for funding and mentoring young entrepreneurs Anglo-Zimele (Anglo American) Funding, mentoring and sourcing from Black Economic Empowerment SMEs Love –Life (Anglo American) Collaborative programme providing HIV/AIDS treatment for employees & communities Lymphatic Filariasis LF (GSK) World wide programme to eliminate third world disease with albendazole Community phone shops (Vodafone) Supplying subsidised secure converted container mobile phone shops in poor communities 3 How MNE projects can have high social and environmental impact • Create an extensive, diverse, and lasting institutional network that delivers • Strengthens local communities (relationships and learning) • Relevant to company, relevant to community. • Meets needs in ways that draw on the company and community interests • MNE and other partnerships contribute their distinctive expertise to ADD VALUE 4 These are the few ‘flagship’ projects • Typically a solvable problem seeking a donor, or arising from a business dilemma, not part of a programme • Receive the same quality professional management as a normal investment project • Limited to health, employment, generation, and entrepreneurship? • International transfer of learning • Legacy network and learning should inspire new projects or even ‘bottom of pyramid’ products/services • Educate politicians to define impactful ‘licence to operate’ demands 5 Most CSR Projects fail to make a lasting and sustainable impact • Tommorrow’s People (Diageo) – UK project helping unemployed into work • Earthwatch (Diageo) – Employees volunteer for conservation research • Projeto Bartender (Diageo) – Trains young unemployed as bartenders • Opportunity international (Vodafone) – Developing software and equipping micro-finance loan officers with Personal Digital Assistants –Providing software development • TSF (Vodafone) – Providing financial support after 2004 Tsunami 6 The majority weak cases • Unambitious projects, often donor looking for a problem • Too trivial to get into the ‘blood stream’ of the company • Either unrelated philanthropy or surrogate commercial acitivities – strategically irrelevant or unimpressive • For an activity that is usually overseen by a board committee, the management is remarkably inconsistent • Glossy social reports including anything remotely relevant adds to the impression of a cynical, cosmetic and uncommitted policy • No legacy of network or learning to transform community or management when philanthropy is exhausted 7 Under what conditions can MNEs contribute to sustainable development? • MNE’s Strategic appreciation of power of external relationships and joint value added creation • MNEs, NGOs, Governments learning how to work together, Overcome climate of suspicion and mistrust. • Government to setting more stringent ‘license to operate’ conditions, but guided by MNEs • Philanthropic pump priming leading to ‘shared’ commercial projects • A major environmental disaster – a wake up call • Higher auditing standards taking a more critical view of information provided by management • An impact metric to convince investment community 8