Transcript Business and Society: Corporate Social Responsibility Professor Alexander Settles

Business and Society:
Corporate Social Responsibility
Professor Alexander Settles
Faculty of Management, State University
– Higher School of Economics
What is Corporate (Social)
Responsibility (CSR)?
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Definitions and Terms
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Corporate social performance
Corporate social responsibility
Social Capital
Corporate responsibility
Business Ethics
Socially responsible investing Business Ethics
Human Capital
Corporate Citizenship
Corporate Accountability
Sustainability
Sustainable Development
What is Corporate Social Responsibility
(CR)?
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Internal
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Business Ethics
Human resource / personnel
management
Labor standards of suppliers
External
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Social – local and global
Environmental
Responsibilities of Business
Economic
Legal
Ethical
(must do)
(have to
do)
(Should
Do)
Discret
ionary
(Might
Do)
Milton Friedman’s Traditional View of
Business Responsibility
“There is one and only on social
responsibility ofEconomic
business – to use
its resources and engage in
Legal
activities designed to increase
profits so long as it stays
within the
Ethical
rules of the game, which is to say,
engages in open and free
Ethical competition without deception or
fraud.” (1970)
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CSR Components
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Business Ethics Environment
Rule of Law – Anti-Corruption
Labor Market Conditions
Environmental Risks
Social/Political Risks
Corporate Governance Risks
Frameworks Triple Bottom Line
(a) Economic bottom line. Although main
emphasis is on financial performance, this often
refers not only to profit but to the philosophies
behind a company's strategy or behavior, the
sustainability of its businesses and its 'human
capital'.
(b) Environmental bottom line. The impact of
its products or operations on the environment,
plus the nature of its emissions and waste and
how it is dealing with them.
(c) Social bottom line. How it approaches issues
such as ethnic and gender diversity, working
hours and wages, staff security and its
contribution to community services or facilities.
WBI Framework
WBI: CR as an Integrated Approach
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A comprehensive set of policies, practices
and programs
Integrated into business operations,
supply chains, decision making processes
Includes responsibility for current and
past actions as well as future impacts
Issues vary by company size, sector, and
location
UN Approach: Global Compact
Human Rights
Principle 1: Businesses should support and respect the
protection of internationally proclaimed human rights; and
Principle 2: make sure that they are not complicit in human
rights abuses.
Labour Standards
Principle 3: Businesses should uphold the freedom of
association and the effective recognition of the right to
collective bargaining;
Principle 4: the elimination of all forms of forced and
compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of
employment and occupation.
UN Global Compact
Environment
Principle 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
diffusion of environmentally friendly
technologies
Anti-Corruption
Principle 10: Businesses should work against all
forms of corruption, including extortion and
bribery.
Russian Firms in the Global
Compact – Joined
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Analytmarketing Joint Stock Company, 2001/06/21
Intersputnik International Organisation of Space, Communications
Technology Hardware & Electrical Equipment, 2003/01/03
Iteren, Professional, Scientific and Technical Services, 2004/05/11
Joint Stock Company Foreign Trade Association, 2002/03/22
JSC "Murmanelectrosviaz", Telecommunication, 2002/06/27
JSC ALTEN, Construction Materials 2005/06/21
Kirov State Air Enterprise, Aerospace & Aviation 2002/03/22
Moscow City Telephone Network, Telecommunication 2002/06/27
MTK Companies Group, Telecommunication 2002/06/27
Murmanelectroviaz Telecommunication 2002/06/27
Nefteyugansk United Airline Transportation Company, Aerospace & Aviation
2002/03/22
Russian Aluminium Joint Stock Company, Metals & Mining 2002/03/27
Sistema JSFC 2002/08/31
Svyazinvest JSC, Telecommunication 2002/06/27
Russian Firms in the Global Compact –
Joined and submitted COP
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CJSC ARM Group Enterprises,
Utilities 2004/05/26
Interros, Finance & Insurance
2001/10/22
Volga-Dnepr Airlines, Aerospace &
Aviation 2000/11/14
Yukos Oil, Oil & Gas 2001/08/15
US Corporate Responsibility
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CSR / Corporate Social
Performance has existed in
some form for more than
25 years in the U.S.
Sources of CSR/CSP:
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Environmental regulation
Foreign Corrupt Practices
outlawed
Development of Socially
Responsible Investment
community
Institutional investors place
pressure on corporations
Employee retention and
development are crucial for
success
Corporate Citizenship – US approach
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Good corporate citizenship;
Provision for a safe and healthy workplace;
Exemplary employment practices;
Responsible environment protection and
practices;
Contribution to the overall growth and
development of the local economy;
Implementation of activities that are compatible
with local science and technology policies
Compliance with international, and local laws,
focusing on anti-corruption, anti-bribery and
transparency.
Source: US Department of State
US CSR Activities
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Business organizations
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The Business Council
Business Roundtable
The Conference Board
Investment screening
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Investor Responsibility Research Center
Dow Jones Sustainability Indexes
Russian Approach
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RSPP – Social Charter
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Economic and financial stability (pay
taxes)
Quality of production (customers)
Labor Relations
Human rights
Protect the environment
Form local associations to work with
local stakeholders and government
Russian Approach
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Measuring
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UNDP & Russian Association of
Manager’s Report “About the social
investments in Russia in 2004”
AMR’s “Business and the social
development of Russia: problems and
prospects” 2006
Reporting
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Accountability
Global Reporting Initiative (GRI)
Examples of Russian Reports
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Alfa Bank
British American Tobacco Russia
JSC Gazprom
JSC Lukoil Oil Company
McDonald's Russia
North-West Timber Company
OJSC MMC Norilsk Nickel
RAO UES
RUSAL
Sibneft (Gazprom Neft)
YUKOS Oil Company PC
Corporate Responsibility as Firm
Strategy Examples
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Environmental concerns or fair
trade concerns allow for companies
to charge premium prices – Ben &
Jerry’s Homemade Inc. and The
Body Shop
Trustworthiness may generate
enduring relationships with
suppliers - Maytag
Corporate Responsibility as Firm
Strategy Examples
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Firms can attract outstanding
employees that desire to work for a
responsible firm – Procter & Gamble
They are more likely to attract
capital infusions from investors who
view reputable companies as
desirable long-term investments Rubbermaid
CSR and Risk Management
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Protecting and enhancing reputation, brand
equity and trust
Attracting, motivating and retaining talent
Managing and mitigating risk
Improving operational and cost efficiency
Ensuring license to operate
Developing new business opportunities –
new products and services, new markets, new
alliances, new business models
Creating a more secure and prosperous
operating environment
Sources of Social Risk
Social Risk Equation
Social Risk as Managed Strategic Risk
Evolution of Social Risks
Reputation, Corporate Responsibility,
and Competitiveness
Does a socially responsible
commitment by corporations
improve the business climate?
 What are the results from the US
and other western countries?
 The CCG has played a role in
exposing the academic community
to Corporate Governance practices
and CSR issues
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Corporate Social Reporting –
Some of the Standards
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Global Reporting Initiative
AA1000 & AA1000SES – AccountAbility
SA8000 SAI
Business process standards
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ISO 9000 "quality management”
ISO 14000 "environmental management”
IAASB’s International Standard on
Assurance Engagements
ISO 26000 “corporate social responsibility
– published by 2008
Stakeholder Engagement Model
Engagement Questions for the Firm
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What is the issue or problem?
How complex is it?
What is its scope?
Who else has an interest in the
problem?
What is working and not working in
the current approach?
What would be accomplished by
engaging others in the dialogue?
Reporting Concepts
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Determine information requirements for early sensing
and reporting
Establish reporting protocols
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Create metrics that support:
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Reporting chain
Reporting frequency (e.g., urgent vs. routine)
Reporting templates
Measurement and assessment of risk impact
Aggregation and prioritization (including common taxonomy)
Meaningful and contextualized understanding of material risks
Develop protocols for early warning indicators for
immediate reporting/action
Identify internal and external information sources
Define reporting tools
Reporting Standards
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Stakeholder Involvement
Subject Area
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Environmental
Labor
Transparency and Ethics
Industry Area
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Forestry
Mining
Oil and Gas
Telecommunications
Hospitality
Sustainability Reports
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Understanding of a company’s
economic, social, and environmental
position
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What kind of company are we?
What are the key issues for long term
financial growth and sustainability?
What are the pressures on the
company?
How should the company be
positioned?
Sustainability Reporting
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Risks to the company – Defining the
scope
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What are the risks?
Who is evaluating the risks?
How often?
Proactive versus Reactive
Setting policies
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Who sets the policies? What is the Board of
Directors involvement?
Involving the company
Involving stakeholders
Sustainability Reporting
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Who is the audience?
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Employees
Government
Public
Investors
Stakeholders
What will be disclosed?
Operational Issues
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Information gathering and control systems
Standard operating procedures
Internal reporting
Assurance