Draft paper on NATIONAL ADVISORY COUNCIL FOR ENERGISING ESR IN SMEs Background

Brief description of UNIDO-SDC Thematic Cooperation. The principles of Entreprise social responsibility (ESR), though far from being universally established, are making an inroad into how the private sector operates, What kind of activities they undertake, what are the principal drivers of ESR and most importantly what can different institutions do to make such initiatives vibrant, strong, inclusive and sustainable. Some literature, especially in the West is available on the role of large enterprises, more so multinational enterprises in fostering socially responsible behaviour. However, the large number of small and medium enterprises (SMEs) in developing countries have so far either played a marginal role in the ESR movement or have not projected their role properly. The project aims to look into these issues in a practical and action-oriented manner to ascertain if ESR compliance is more feasible and sustainable for SMEs that are located within clusters on account of the greater potential for coordinated private partnerships within such geographical concentrations. Building on its role as the role as the specialised UN Agency within the UN Global Compact with a mandate on SMEs and its decade-long experience in the field of SME cluster Development, UNIDO teams up with the Swiss Agency for Development and Cooperation (SDC) on a Thematic Cooperation that encompasses both action-oriented research and field-level technical assistance. The project aims at identifying and disseminating good practise to operational suggestions on how to enhance SME participation in the ESR movement. OBJECTIVE of the thematic cooperation Project The developmental objective of this project is to further enable a greater number of small and medium manufacturing enterprises in developing countries improve their overall competitiveness in a socially responsible way, and, therefore, integrate more successfully and sustain ably into national and international supply chains. The immediate objective of this project is to explore and start addressing the reasons behind the seemingly low level of participation of SMEs from developing countries in the ESR movement. As explained above, such low participation raises serious doubts on the capacity of many SMEs from developing countries to effectively integrate into regional/global value chains but also to ensure a sustainable and harmonious rate of growth. Historical Evolution of the Thematic cooperation Project. In order to achieve our objectives, we started with a pilot initiative at Jalandhar SMEs Sports Goods Cluster in May 2005 and our efforts there have been successful to a large extent. But Jalandhar was too small a place to understand the diversity of SMEs behavior towards ESR and therefore the research work was expanded to four more clusters namely Moradabad (Brass), Trichy (Engg.), Kalady (Food Processing Rice Milling) and Ludhiana (Garments). We have carried out ESR study survey in these clusters and the survey reports are almost ready. Jalandhar Survey is also complete and the consolidated report on understanding of ESR Page 1 of 7

behaviours across cluster is under process. Besides this , 3 more outputs have been completed viz. A study on SME clusters and responsible competitiveness in developing countries that was sub-contracted to AccountAbility (UK) has been completed. Based on a host of examples and case studies, this research paper substantiated the following conclusions: 1- Clusters offer a useful entry point for agencies seeking to encourage responsible practice. 2- Working collaboratively within a cluster, businesses are able to take advantage of market opportunities that they could not achieve alone. 3- Cluster approaches can reduce the pain barrier of cost and risk, and adapt international tools and standards for local contexts. 4- Responsibility pressures provide an external challenge, which catalyses collective action, dialogue, trust and capacity building within clusters and with other linked organizations and sectors. For more information please refer to http://weplayfair.com/downloads/AccountAbility.pdf A research note on, Dynamics of social responsibility in small & medium enterprises & SME clusters, has been developed by the project office in Delhi (India). The paper is based on the secondary literature review as well as some of the on-field experience from the selected cluster in India. This research has led to exploration of three key drivers for socially responsible behaviour amongst SMEs, namely the business case, compliance pressures, and the philanthropic mind-set of business owners. It looks into the constituent of each of the drivers and also their application in a SME cluster setting. For more info please refer to http://weplayfair.com/downloads/SME_Perspective_Paper.pdf Mapping and listing of Different Govt. Schemes focused towards ESR and different resource institutions is almost completed. This listing would be helpful for cluster based associations, NGOs and voluntary organizations to get funding to take their ESR agenda forward. But we are looking even beyond this to the national level and there we need the help and cooperation's of all like minded organizations and individual experts in the areas of ESR specially working for SMEs. We are in the process of identifying such organizations / experts to have some form of bilateral or multilateral understandings to work jointly. (bilateral/multilateral level0 WHAT IS THE NEED FOR THIS NATIONAL ADVISORY COUNCIL? Purpose UNIDO has developed a Roadmap which is attached as annexure-1 which details out the work to be undertaken in order to achieve the above said objectives of this thematic cooperation. All the work which is carried out by UNIDO CDP related to ESR in SMEs has a limitation of knowledge, time and coverage of issues, so it is felt that if a group of like minded organisations and individual experts are brought together under a National Advisory Council

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which would not only analyse and assimilate the present work carried out but also decide the future direction and ultimate goal of this project. It will be a multi stakeholder group with professionals from diverse fields of development activity who will not only bring in their knowledge and expertise but also a large network of resource organisations, NGOs, Researchers, social action and advocacy groups. This Council will identify, promote and pilot new initiatives which are relevant to development of Methodology for infusing ESR dimension in UNIDOs existing Cluster Development methodology and training manual. Time period : This council will be formed for 12 months (Nov2007- Oct 2008) under UNIDO-CDP programme which can continue thereafter as per the groups internal decision. Focus Areas for the Advisory Council Understanding behaviour of SMEs towards ESR, what activities they do, how do they decide and prioritise them for action and funding. Methodology of engagement of different stakeholders at the local, national and related international level. Policy measures on SME ESR ( inclusive growth) Building Knowledge Base on ESR Mainstreaming ESR education in Business Schools Communication and Advocacy on ESR Methodology 1. UNIDO will coordinate and support the activities of this council. 2. Regular meeting may be on monthly basis will be held. 3. Some fixed honorarium for the participants plus re-imbursement of actual travelling expenses will be paid by UNIDO. 4. All expenditure incurred related to functioning of the council would be met by UNIDO through the Thematic Project budget. Specific Functions of the Council 1. To examine/validate/prioritise the roadmap for ESR project. 2. To identify and select resource organisations/ persons who can take forward this mission. 3. To analyse the inputs from these resources and give comments for improvement and fine tuning. 4. To monitor and coordinate the activities related to policy level advocacy / recommendation. 5. To suggest ways and means to carry forward the ESR agenda beyond the life of the project i.e Oct 2008.

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Major outputs 1. At least 10 organisations and 10 experts in the country have common understanding on at least some aspects of ESR related to SMEs. 2. Methodology document agreed and approved for energising ESR in SME clusters. 3. Development of Training Toolkit on infusing ESR in SMEs to train development professionals/consultants on this subject, agreed and approved. 4. Policy level interventions at initiated in certain domains with relevant institutions. 5. Resource Centre(s) OR network(s) ready to carry forward the agenda in future.

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UNIDO Roadmap for 12 months ( 1 Nov 2007 31 Oct 2008)

Output 1. ESR mainstreami ng in SME cluster development methodology which means reorientation of Existing Cluster Developmen t Methodology with ESR approach by updating following tools. Cluster Selectio n Diagnost ic Study Trust building Action Plan Impleme ntation Monitori ng & Evaluati on Exit Strategy Sub activity Pilot Activities to understand suitable strategy (based on Cluster map/drivers etc) for cluster ESR intervention. To understand CDP with application of ESR behavior in SME Cluster at Sports Goods Cluster Jalandhar as pilot project and draw learnings from the same. ( ongoing) Pilot initiative on improving H & S of workers of Trichy Fabrication Cluster which would be first of its kind because in this case the large buyers are involved in the programme. ( Under Explorations) Identification of few more pilot initiatives in clusters on ESR to draw extra learnings. ( Under Explorations) Partnership with VFC-WRAP- LUDHIANA cluster firmsUNIDO on improving compliance standards for Ludhiana cluster firms. Partnership with ETI for their home workers project at Barailly Cluster Mapping (ESR Diagnostic/ trust building) . To map and understand the ESR behavior in five different cluster in India (Kalady, Trichy, Moradabad, Ludhiana & Jalandhar) and learning from them through a structured questionnaire. Publishing consolidated report on SME ESR survey of these 5 clusters. (ongoing) Preparing a methodology on Cluster Development with ESR perspective Research on secondary information available to understand behavior of SME towards ESR. (Done) To understand what drives ESR in SMEs (Done). Identify and document SME ESR issues , challenges , best practices ( case studies) etc Mapping of Different Govt. schemes which can be focused on ESR. Are SMEs different from Large firms in the behaviour towards ESR (e.g. perception, type of activities, Drivers, amount spent etc. Behaviour of SME outside the cluster environment VS the one in the cluster. Comparison of requirements of buyers (local and
Priority

st

Annexure-1
Time line Possible resource /partner SGMEA/ SGFI/ REACH SUZLON/BHEL /BHELISA

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Oct/ Nov 2008

**

Oct/ Nov 08 Jan 08

**

*** *** ***

Oct./Nov 08 Oct 08 Dec07

UNIDO/ ASK/ Individual experts.

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June 08

UNIDO

** ** ** ** ** ** **

Done

UNIDO UNIDO UNIDO ASK,PIC CII UNIDO UNIDO Individual Experts UNIDO UNIDO

Done Mar-08

2. Developmen t of Training Material for Cluster Developmen t Agent (CDA) for CDP with ESR angle.

Jan-08

Jun08

Jun08 Mar08

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international). Preparation of training material To work on Inducing Factors of ESR in SMEs ( Under Explorations) ( Diagnostic/ Action Plan) Financial Institutions SMEs Credit Rating Agencies Corporate having SMEs in their supply chain. What role they can play in shaping the ESR in SMEs. National Advisory Group *** ***
June 08 Jun-08

3. Advocacy and Policy

Individual expert -doUNIDO More partners / experts to be identified UNIDO/FICCI CII/ASK/PIC/FI SME/Individual Experts. UNIDO

4. Disseminatio n of information

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Ongoing

National and International level workshop

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Jan 2008 (national Sept 2008 (Internatio nal)

Dialogue with stakeholders like Government, industry and its associations, FIs etc, Academic institutions, experts and practitioners. Publishing and dissemination of documents, reports, research papers. CDP methodology with ESR dimension, CDA training toolkit, Listing of schemes & resource/ knowledge organizations, ESR mapping report etc. Inclusion of SME ESR on Academic world like colleges, business schools, research papers etc. Establishing Resource centre (s) 1. Methodology diagnosis, resources, action plan, implementation, monitoring 2. Training manual 3. Case studies on best practices 4. legal maters related to ESR 5. Mapping of Knowledge institutions/ resources institutions, BDS provides etc

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June 2008

UNIDO UNIDO CSM, ASK CII UNIDO PIC/ ASK UNIDO ASK ,CII, FICCI FISME, PIC , Management institutions, Individual experts,

* **

June 2008 Dec 2008

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Annexure-2 Tentative list of resource organisaiton /persons which can be part of this national advisory council on SME ESR
S/N Name Organisations 1. Mrs. Seema Arora Mr. Shikhar Mr. Sachin Joshi 2. Ms. Ranu 3. Mr. Anil Bardwaj 4. Mr. Viraf Mehta Mr. Khurram 5. Dr. Aqueel Khan 6. 7. 8. 9. 10 Ms. Vinita Ms. Richa Mittal Mr. Badrinath Gulur Mr. Karan Butalia Mr. V R Jathar Ms. Prema Organisation CII- Centre of excellence, New Delhi FICCI - SEDF, New Delhi FISME, New Delhi Partners in change ( PiC), New Delhi. Association for Stimulating Know How (ASK) , Gurgaon. Ethical trading Initiative (ETI) Fair Labor Association (FLA) Social Accountability International (SAI) AXIS Bank, New Delhi. Bombay Chambers of Commerce and Industry ( BCCI) MDI, Gurgaon. Freelance Consultant Author of Book: ., New Delhi. IIFT, New Delhi Freelance Auditor, (ALGI), Jalandhar. CSR Reliance EDII, Ahmedabad. Specific Area Confirmed Confirmed Confirmed Confirmed Confirmed Yet to Confirm Yet to Confirm Yet to Confirm Confirmed Yet to Confirm

Individuals 1. Prof. Bakhsi 2. Ms. Meera Mitra 3. 4. 5. 6. Ms. Pushpa Kumari Mr. JS Sodhi Ms. Sunanda Dr. Avasthi

Yet to Confirm Confirmed Confirmed Confirmed Confirmed Yet to Confirm

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