ST513E Session1 Part II Presentation of the subject

1. Corporate Social Responsibility 2. CSR and Sustainable Development 3. CSR and Stakeholder Theory

Section 1
Corporate Social Responsibility

Origins of CSR (1)

At the beginning of the century: In Europe: paternalism of big business France: (Michelin, Godin, etc.) England and Germany: Cadburys and Krupp provided housing, healthcare or education for workers In the USA: philanthropy (from Carnegie and Rockefeller in the 1900s to Warren Buffet and the Bill and Melinda Gates Foundation) the first ethical funds (religious communities) better compensation for workers at the factories of Henry Ford (5$/day)

Corporate Social Responsibility

Origins of CSR (2)

From the 1950s: Civil Rights Movement (emancipation of Blacks in the USA) NGO activism (Greenpeace and Amnesty Intls boycotting campaigns) Regulations resulting from industrial catastrophes (Bhopal, Exxon Valdez) Growing awareness of ecological issues (climate, biodiversity) The social divide (precariousness, social exclusion)

The CSR Boom from the 1990s Onwards

Sustainable Development (SD) and CSR are already integrated or are in the process of being integrated by a growing number of companies of all sizes in different sectors in different countries

It is not only a fashionable phenomenon but in fact a profound movement which amplifies in the 1990s and continues to grow
The biggest and most advanced companies have put in place specific structures, strategies, multi-annual plans of action and reporting tools These participate in specialized networks to exchange good business practices throughout their supply chains which result in a ripple effect in the whole sector

10 Concrete Examples of CSR

1. The Grameen Bank
2. Green Mountain Coffee Roasters 3. Timberland 4. Eziba 5. Canon 6. Danone 7. Lafarge 8. Ben & Jerrys 9. Toyota 10. Nike

The Grameen Bank

A financial institution to serve the worlds poor Internationally recognized bank operating in 44,000 impoverished villages throughout Bangladesh and the developing world The Bank provides low-interest personal loans, microenterprise loans, scholarships and educational loans to predominantly women in countries prone to poverty and natural disasters Since 1976 it has lifted hundreds of thousands out of poverty, grown the Bangladeshi economy and achieved profitability Because of its extraordinary positive impact, microfinance is now a global phenomenon

Green Mountain Coffee Roasters

Stand up for justice by engaging in fair trade and establish a powerful new role for business in society The company is known for its fair trade program in an industry where most of the 250 million people dependent on coffee for their livelihood are poor because only 2% receive a fair price for beans Fair trade is an international movement lead by nonprofits like TransFair which works with corporations and supplier communities to establish floor prices and to streamline practices to build economic independence and empowerment in farmer communities Individual relationships with shareholders, employees, customers, vendors, and suppliers are very important; they are treated with respect, dignity and compassion

Timberland
Top brand thriving by integrating cause partnerships Company values: humanity, humility, integrity and excellence Idea that business can also be focused on activating higher levels of responsibility, engagement partnership and positive change Community and other stakeholder engagement are very important

Partnership with City Year, a potent national youth corps The purpose is to involve youth in civic-service projects (cleaning of neighbourhoods, building of new parks and playgrounds and assistance to elderly citizens and children) that make a profound difference both in urban and in rural communities across America

Eziba
Social and environmental values throughout company operations from revenue models to sourcing Eziba is an Internet and catalogue retailer of decorative art products that are made by poor people in developing countries (Rwanda, Botswana, Kenya, Afghanistan, Guatemala) The betterment of society is the highest corporate priority and the lives of thousands of people have improved because of the companys commitment Eziba managed to successfully root its business models in its core values to obtain social as well as monetary profits Strong ethics led to commercial success which is recognized by both Forbes and Time magazines (best of the web)

Canon
The companys philosophy of Kyosei 'living and working together for the common good' is at the centre of company operations Canons aim: to contribute to the prosperity and happiness of humankind while remaining profitable Environmental strategy for resource and energy conservation; social and environmental initiatives across Europe, Africa and Asia Humanitarian aid and disaster relief partnership with the Red Cross (2004 tsunami, disasters in Peru, Bangladesh, China, Japan) Supporting employees charitable activities in the Netherlands, Canon employees carry out volunteer work with children suffering long-term illnesses

Danone
A global approach which combines economic, societal and environmental objectives and reaches further than its factories The companys key themes are climate change, biodiversity, people, water, packaging and agriculture Grameen Danone Foods has been designed to provide children with many of the key nutrients that are typically missing from their diet in rural Bangladesh; the project aims to create a small dividend of 1% / year

The danone.communities fund is also currently investing in two new social business enterprises: 1001 Fontaines, which provides drinking water for people in rural areas of Cambodia, and Laiterie du Berger, collecting milk from Peul herders in Senegal Supporting employees charitable activities Danone employees support the Restos du Coeur

Lafarge
The values of integrity, responsibility, courage and respect for others permeate its operations in all places where it operates Social development including respect for local communities and environmental protection are important goals

Stakeholder collaboration (clients, suppliers, local communities, shareholders) regularly takes place
Lafarge Way: two-way development approach 1. Multi-local (products are used where they are manufactured and local actors are involved) 2. Global (local and international partners work together for longterm development) Partnership with the WWF (biodiversity) Social projects in collaboration with CARE (HIV/Aids); malaria assistance in Malawi

Ben & Jerrys

Initiating innovative ways to improve the quality of life of a broad community local, national, and international
Importance of "empowering Ben & Jerry's employees" to enable environmental and social initiatives to be undertaken The company uses Fairtrade products and sources its ingredients from producers and suppliers who share its values in its supply chain strategy Limiting damage to the environment: ecological footprint measurement including management of water, energy, waste, emissions and recycling Vermont Dairy Farm Sustainability Project to reduce phosphorous run-off and nitrogen leaching in dairy operations, while maintaining economic viability New product development: launch of new flavour, "One Sweet Whirled" to raise awareness of global warming

Toyota
The company promises harmonious and sustainable development of society and the earth through all its business activities
Increasing long-term corporate value by engaging in favorable relationships with all the stakeholders including customers, business partners, local communities and employees; health and safety of employees is an important value Investment in human resources and respect for diversity are important values gender diversity and issues women face in the workplace are addressed Loops project which brings more disabled people in the loop through employment and by making society more aware of disabled peoples needs The company invests a lot in research to produce the best eco-friendly cars which will use alternative fuels and battery power (lower carbon emissions)

Nike
This global company wants to bring about systemic change for workers within its supply chain, and in the industry Several tools are in place to ensure that responsibilities towards workers down the supply chain are met (Workers in Contract Factories; MAV Management Audit Verification Tool, ESH Environment, Safety and Health...)

Gender equality the Nike Foundation hosted a symposium in Brazil which promoted the role of men in fostering gender equality
A global effort, in partnership with several governments, to put adolescent girls at the centre of HIV/AIDS prevention strategies was initiated

CSR: some questions

What should ultimately be companies roles and responsibilities? Should companies be held responsible for activities such as building schools and providing health care? Should companies be forced to comply with international codes and standards? In todays globalized world, are companies truly committed to CSR or is it only a matter of public relations? What can be done to forge greater cooperation between companies and governments?

CSR Networks (1)

International Networks:
The Global Compact of the United Nations
The WBCSD (World Business Council for Sustainable Development) global BSR (Business for Social Responsibility) USA

European Networks:
CSR Europe EU BITC (Business in the Community) UK Fundacin Empresa y Sociedad Spain

CSR Networks (2)

French Networks:
ORSE (Observatory of the social responsibility of business) Alliances for CSR Ore (Environmental Aspects) EPE (Enterprises for the Environment) E&P (Enterprise and Personnel)

IMS Undertakings for the City (Institute of Solidarity Sponsorship, ex-IMH)

ADMICAL (Association for the Development of Sponsorship)

Can CSR be defined?

Not one formal and agreed upon definition exists; the meaning of the concept raises several debates For lack of a solid foundation, CSR is generally defined with reference to Sustainable Development (SD) and Stakeholder Theory (SHT) The Social Responsibility of business is built upon three dimensions:

Internal Social Dimension Social / Societal Dimension

Environmental Dimension

Internal Social Dimension (1)

Working conditions: hygiene, health, security,

ergonomics

Compensation policy: participation to the benefits,

agreements between unions and management for fair salaries for employees

Social dialogue in companies: annual interviews,

consultation with internal stakeholders

Social climate in companies: less strikes, less

absenteeism, loyalty to company projects

Internal Social Dimension (2)

Better management forecast for employee competencies: training, employability Working hours: chosen part-time, distance working Integration of precarious categories: disabled persons,
minorities, marginalized persons

Principle of non-discrimination: age, gender, ethnic

origins or the contrary, positive discrimination for disadvantaged categories (USA, South Africa)

Social / Societal Dimension (1)

Respect for human rights : refusing child labor,

protection of indigenous peoples (e.g. Amazonia)

Implication in the life of local communities: donations,

funds, urban rehabilitation, school support

External stakeholders: dialogue, taking into

consideration their expectations

Participation in the fight against exclusion:

poverty, illiteracy

Social / Societal Dimension (2)

Social value addition to products and services:

target the consumactors (consumers who act as conscious and responsible citizens when buying products)

Support for local economic development:

capital inflow, support to the third sector

Inter-organizational relations with other actors:

associations, NGOs, partnerships

Planning and management of psycho-social effects of restructuration: reconversion of sites,

reclassifying of dismissed employees

Environmental Dimension (1)

Eco-design: taking into consideration the ecological impact

of products and services during their life cycle

Limitation of energy and primary resources consumption: electricity, water, packaging Recycling of office supplies and used products Fight against pollution: reduction of emissions into the
atmosphere, water and soil

Prevention and preparation for industrial risks:

realization of environmental impact studies at each new operation site

Environmental Dimension (2)

Rehabilitation of impacted sites after their exploitation:

quarries, mine deposits, oil wells (extractive industries)

Programs to reduce the use of transport for company

activities related to logistics as well as for employees (car sharing)

Protection of the biodiversity and the eco-systems of the

sites in the countries where the company operates

Application of the precautionary principle in terms of

scientific and technological research

Section 2
CSR and Sustainable Development
The dramatic increase of CSR in the 1990s in management science literature, as well as in business practice, is evidently linked to the sustainable development movement Definition of Sustainable Development: Since the 1992 Earth Summit in Rio, a series of seven UN conferences followed on environment and development. They coined the most widely used definition of sustainable development as: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

CSR and Sustainable Development

This definition contains three key concepts:

1. The intergenerational dimension 2. The concept of "needs", in particular the essential needs of the worlds poor, to which overriding priority should be given 3. The idea of limitations imposed by the state of technology and social organization on the environment ability to meet present and future needs

Emergence of Sustainable Development Chronology

1972 : Stockholm Conference 1983 : Global Commission for the Environment and Development 1987 : Brundtland Report Our Common Future 1992 : Rio de Janeiro Conference 1997 : Kyoto Conference 2001 : Gteborg Summit (EU strategy) 2002 : Johannesburg Summit 2005 : Actual enforcement of the Kyoto Protocol After 2012 : Quid ?

Sustainable Development A ternary concept

Long term economic performance

Profit

Dynamics
of Progress People
Social Cohesion

Planet
Respect for the environment

Triple P

Sustainable Development Essential Principles

Responsibility towards future generations Solidarity with poor countries Responsible management of resources

Participation of social actors

Precaution: evaluating a priori the risks for man and the natural environment

The preservation of the biosphere: A major stake (1)

All the important international reports proclaim the same message : Inter-Governmental Panel on Climate Change (IPCC) Reports, the Stern Report, United Nations Environment Program (UNEP) Reports, the Millennium Ecosystem Assessment, the Pentagon Report Climate change is a reality which is caused by human activity Origin: industrial revolution Acceleration during the 20th century Scenarios going from +2C to +6C in 2100 The Greenhouse Effect If the gas emissions stopped today, the situation would continue to degrade during several more centuries; but the emissions are not even stabilized, they are still in progress +2C on average what regional variations? Higher distances according to geographic areas

The preservation of the biosphere: A major stake (2)

Some of the forecasted consequences of global warming for the next centuries (non exhaustive list): An increase of the frequency and intensity of events linked to extreme weather conditions (hurricanes, storms, floods, etc.)

Rising of the sea level caused by the expansion of water, the melting of glaciers, of the Antarctic and Greenland
Quasi complete disappearance of the primary tropical rain forests Advancement of desertification in China, India, Sub-Saharan Africa, Europe (Spain) Destruction of most of the ecosystems and impoverishment of biodiversity Sixth massive extinction of the animal species in the history of evolution

The preservation of the biosphere: A major stake (3)

The foreseeable consequences of global warming for the next centuries: Large zones will become uninhabitable : Bangladesh, the Netherlands, Florida as will important nerve centers of the planet such as New York, Shanghai, London Climate refugees by the millions, searching for food and water Planetary increase of new viruses and pandemics associated with bird flue, malaria, dengue fever Food shortages, hunger riots Conflicts between countries over resources (fuel), geopolitical tensions, anarchy and global disorder

Other Major Stakes

Globalization and its socially ambivalent consequences : the phenomenon causes serious external inequalities between countries (developed countries, BRICS, LDCs) and internal inequalities in each country (very rich people versus the have-nots and the working poor ) it also brings about the constitution of a middle class in some parts of the developing world The Peak Oil phenomenon : the fuel production will reach its maximum (around 2015?) before declining progressively tendency to an increasing and more volatile price of the barrel of crude oil. In 2008 the price per barrel reached $150 Demographic growth : according to current estimations, the earth will have 9 billion inhabitants in 2050 will it be possible to respond to their needs?

Section 3 CSR and Stakeholder Theory

Stakeholder Theory occupies a central place in CSR research
The management of stakeholder relations has become an important part for all companies engaging in CSR

Origin (in the academic sphere):

Edward Freemans book Strategic Management: A Stakeholder Approach (1984) Definition: All individuals or groups which can affect or may be affected by the realization of the objectives of an organization

Identification of Stakeholders Typologie des stakeholders Typology of reference (ou parties prenantes)
Institutional investors, business leaders, managers Employees, collaborators, partners, unions Clients, suppliers, sub-contractors, insurance companies, banks, (competitors)

Shareholders
Internal stakeholders Operations partners

Social Community

Public sector, the media, NGOs, environmental associations, civil society, future generations
More a stake than an actor

The natural environment

Identification of stakeholders Traditional mapping (a)

Investors Clients Employees

Environment

Company X

Media

Competitors Activists

Suppliers

Communities

Can affect or may be affected by

Identification of stakeholders Traditional mapping (b)

Employees Local Communities Investors

Supply Chain

Company Y

Customers

Partners & Alliances The State Regulatory Authorities

Unions

Can affect or may be affected by

A Holistic Vision of Management

Human Dimension

Technical Dimension

Environmental Dimension

Economic Dimension

The Dimensions of Company Management

Financial Dimension

Cultural Dimension Organizational Dimension

Social Dimension