CSR, Smarter Business, and What it Means for Management


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Presentation given to the Association of Community Practitioners in Bucharest, Romania, on September 12 2011. The presentation covers business management issues relating to sustainability, the business case for ethics, management trends, upcoming and potential EU legislation around reporting, and how companies are specifically engaging in embedding sustainability in to their operations.

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  • Dear Graduates,

    CSR will create new carrier opportunities.
    Pl visit www.icsm.in . We are offering MBA-CSR, Phd. CSR

    Sanjeev Chaudhary
    Head Social Advisory & Marketing ICSM
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CSR, Smarter Business, and What it Means for Management

  1. 1. Smarter business (CSR): How the global agenda is changing, and what it means for management Toby Webb, MSc. Founder & MD, Ethical Corporation & Stakeholder Intelligence / Lecturer, Corporate Responsibility, University of London. 12/09/11 Bucharest Blog: ethicalcorp.blogspot.com Website: www.ethicalcorp.com Email: Toby.Webb@ethicalcorp.com Twitter @tobiaswebb76 LinkedIn: uk.linkedin.com/in/ethicalcorp
  2. 2. <ul><ul><li>Briefly, Who am I, and why am I here? </li></ul></ul><ul><li>Founded Ethical Corporation in 2001. EC has organised more than 80 CSR conferences world-wide, published 8000 articles and reports </li></ul><ul><li>(EC interviews more than 800 executives per year for research reports, management articles, conferences on CR) </li></ul><ul><li>Lecturer at Birkbeck College, University of London on CR </li></ul><ul><li>Co-chaired independent working group on CSR for UK Government 2006-8 </li></ul><ul><li>Director of Stakeholder Intelligence : Bespoke company training and contract research business </li></ul>
  3. 3. CSR perceptions to avoid
  4. 4. <ul><ul><li>Global trends that will affect CSR: “Smarter business” </li></ul></ul><ul><li>Economic considerations </li></ul><ul><li>Environmental degradation and regulation </li></ul><ul><li>Unemployment and the jobs agenda </li></ul><ul><li>Social exclusion and unrest </li></ul><ul><li>Trust in business: Social and traditional media </li></ul><ul><li>The weakness of institutions (world-wide) </li></ul>
  5. 5. <ul><ul><li>Global trends for leading companies: The smarter business agenda </li></ul></ul><ul><ul><li>1) B2B collaboration on sustainability, with competitors, partners and suppliers </li></ul></ul><ul><ul><li>2) The business case, particularly around internal and external behavioural change </li></ul></ul><ul><ul><li>3) Engaging with campaign groups </li></ul></ul><ul><ul><li>4) Corporate reputation and new/evolving media </li></ul></ul><ul><ul><li>5) Company strategy and process, product, design and manufacturing innovation </li></ul></ul><ul><ul><li>6) Business contributions to tackling bribery and corruption </li></ul></ul><ul><ul><li>7) Corporate contributions to development , policy and institutional frameworks </li></ul></ul>
  6. 6. <ul><li>EU policies and regulations relevant for Romanian business </li></ul><ul><li>Climate change * Pollution & non-GHG emissions * Energy efficiency * Anti-corruption * Taxation * The Internal market * Transparency * Commodities and agriculture * Business roles in social harmony * Human rights and business * Business and development </li></ul><ul><li>Specifically: </li></ul><ul><li>· New Communication on CSR – Set of policy indicators which might lead to legal indicators in 2013 (October 5 th ) </li></ul><ul><li>· ESG Disclosure – Consulting on CSR Reporting directive that will be announced under the Danish EU Presidency (1 st  half 2012) </li></ul><ul><li>· Corporate Governance – reworking of the single market CG framework </li></ul>
  7. 7. <ul><li>EU and Communication on CSR </li></ul><ul><li>New Communication on CSR in October 2011 (First since 2006) </li></ul><ul><li>New legislative proposal &quot;The Single Market Act&quot; in April 2011 committed EU to new legislation on social and environmental transparency </li></ul><ul><li>John Ruggie’s business and human rights framework important: </li></ul><ul><li>EU considering specific human rights guidance for SMEs </li></ul><ul><li>Will stress importance of global guidelines : ILO, OECD, Global Compact, ISO 26,000. NO PLAN to develop EU guidelines </li></ul><ul><li>One key theme will be non-financial disclosure by large EU companies </li></ul><ul><li>Q1 2012: Proposal to update EU law on what companies will be obliged to disclose . Proposal will go to EU Parliament, final version will become EU law to be implemented nationally </li></ul>
  8. 8. Prediction: There WILL be EU Law by mid 2013 at earliest on further EU company disclosure on CSR issues BUT: Hard to say what the final outcome will be, ie what it will be! HOWEVER: Likely to go beyond current EU Business Review requirements. The key question for the Commission is MATERIALITY : Will companies be asked to disclose things they do not feel will be useful? October Communication document will discuss reporting and repeat commitments, but will not say the precise proposals will be Key period for debate will be between October 2011 and March 2012 <ul><ul><li>European Communication on CSR </li></ul></ul>
  9. 9. <ul><li>Why business ethics is important </li></ul><ul><li>The trust element: Ethics fundamental to sustainability </li></ul><ul><li>The compliance element: Anti-corruption enforcement slowly increasing. (US Foreign Corrupt Practices Act a powerful tool of US DOJ, UK Bribery Act significant for listed UK firms and others trading in UK) </li></ul><ul><li>Other EU state enforcement of UNCAC also important </li></ul><ul><li>For B2B businesses : Codes of Conduct, KPI’s and CSR performance increasingly relevant. For example: </li></ul><ul><li>- Vodafone writes to KPMG for sustainability performance data as a major supplier to the company. </li></ul><ul><li>- Favoured status increasingly given to better performers by large brands ( P&G , WalMart etc) </li></ul>
  10. 10. <ul><ul><li>The nine key elements to the modern business case for CSR </li></ul></ul><ul><ul><li>1. Brand value and reputation  – benefits realised from responsible business that improve the value of the brand and/or the reputation of the brand or organisation.  2. Employees and future workforce  – benefits from responsible business practice that affects the working life of employees, and the ability to attract and hold on to talent. This includes employee motivation, productivity, recruitment, satisfaction, retention, engagement, and loyalty.  3. Operational effectiveness  – improvements and innovation in an organisation’s practices and processes as a direct result of being more responsible and sustainable, creating more effective operations and higher levels of efficiency.  4. Risk management  – benefits resulting from CR efforts that improve the organisation’s ability to identify and reduce exposure to risk, and prepare for and manage risks better.  5. Direct financial impact  – direct benefit to the financial performance of an organisation. For example improving access to capital, reducing costs, and improving shareholder value.  </li></ul></ul>
  11. 11. <ul><ul><li>The nine key elements to the modern business case for CSR </li></ul></ul><ul><ul><li>6. Organisational growth  – an opportunity for overall organisational growth derived from being a responsible business, whether through new markets, new product development, lateral expansion, new customers, or new partnerships/alliances.  7. Business opportunity  – new opportunities or innovation generation created for all stakeholders specifically because of their efforts in being a responsible business. This can result in new business development, but critically it is about win-win opportunities for a variety of stakeholders.  8. Organisational leadership  – defined as “leadership achieved through helping society” which results from a radical change in the internal corporate values and external market reconstitution.  9. Macro-level sustainable development  – defined as “the impact and responsibilities an organisation has to higher level economic, social and environmental issues”.  </li></ul></ul><ul><ul><li>(Grayson, D. Ethical Corporation, September 2011 edition) </li></ul></ul>
  12. 12. <ul><ul><li>How CSR practitioners should adapt to the changing CSR trends </li></ul></ul><ul><ul><li>Understand the constant need to make the business case </li></ul></ul><ul><ul><li>Search more widely for facts and measured impacts of CSR to persuade management </li></ul></ul><ul><ul><li>Make internal change programmes directly relevant to business unit heads: E.G. talk about resource security, supplier resilience </li></ul></ul><ul><ul><li>Accept the role of CSR head is becoming change management / behavioural change agent </li></ul></ul><ul><ul><li>Make practices and measured impacts, where possible, relevant to investors </li></ul></ul><ul><ul><li>Improve communications around corporate contributions to social/economic/environmental good </li></ul></ul>
  13. 13. We all need friends…
  14. 14. <ul><li>Natural partners for CSR practitioners: Inside and out </li></ul><ul><ul><li>Business unit heads with responsibilities for: </li></ul></ul><ul><ul><li>1) Power generation  2) Manufacturing  3) Site and office efficiency  4) Procurement, suppliers and the supply chain  5) Transportation & logistics  6) Product materials, design and use  7) Product disposal/recycling/upcycling  8) Employees </li></ul></ul><ul><ul><li>9) Communities </li></ul></ul><ul><ul><li>10) NGOs, campaign groups and think tanks </li></ul></ul><ul><ul><li>11) External affairs, Academic & Government engagement </li></ul></ul>
  15. 15. <ul><li>Building partnerships with other departments: HR </li></ul><ul><ul><li>Make the business case: </li></ul></ul><ul><li>•   The rational component (Think):  Employees' support and alignment with the organization's strategy, goals, culture and values </li></ul><ul><li>•  The emotional component (Feel):  The degree to which employees feel an emotional sense of belonging, attachment and pride towards their organization; includes a willingness to recommend it to others as a place to work </li></ul><ul><li>•   The motivational component (Act):  Employee's willingness to exert extra effort and go above and beyond their normal job responsibilities in order to help their organization succeed. </li></ul><ul><li>( Towers Watson ) </li></ul><ul><li>  </li></ul><ul><li>Who claim in a recent study that: </li></ul><ul><li>“ Operating income in high-engagement companies improved 19.2 percent over a 12-month period. In low engagement companies it declined 32.7 percent.” </li></ul>
  16. 16. <ul><li>Network for Business Sustainability: “Embedding Sustainability in Organizational Culture: A How-To Guide for Executives.” (2010) </li></ul><ul><li>  </li></ul><ul><li>Comprehensive  Systematic Review  of 179 studies spanning 15 years of applied and academic research shows that at least half the job of embedding sustainability involves &quot;informal&quot; practices including: </li></ul><ul><li>Collaboration </li></ul><ul><li>Education & learning </li></ul><ul><li>Knowledge management </li></ul><ul><li>ALONGSIDE process management and incentives: </li></ul><ul><li>  http://www.nbs.net/wp-content/uploads/Dec6_Embedding_Sustainability.pdf </li></ul>
  17. 17. CSR is smarter business : IF we link it to company performance
  18. 18. <ul><ul><li>Bridging the gap between communications and CSR </li></ul></ul><ul><li>Expect a crisis : It can come any time. NGOs will help you spot it! </li></ul><ul><li>Be prepared: Have up to date data, labour partnerships, policies outlining company approach. Admit situation not perfect </li></ul><ul><li>Keep colleagues informed: Have fact sheets updated regularly. Meet with communications team and get them engaged </li></ul><ul><li>Have corporate policies and information written in a plain and simple way for outside scrutiny </li></ul><ul><li>Build the bank account of goodwill : Cultivate NGO and opinion former partnerships, at home and aboard </li></ul><ul><li>Be honest about the challenges you face and don’t be proud: Engage your critics, ask for ideas as to what you should do beyond standard best practice: Patagonia, Timberland good examples of online debate </li></ul>
  19. 19. <ul><ul><li>Companies and actions </li></ul></ul><ul><li>CSR Champions Networks: HSBC, Alliance Boots, Reed, Accenture, PWC, many others ( Doughty Centre , Cranfield University 2009) </li></ul><ul><li>Embedding in job functions: At Nike , ethics and environmental issues co-managed by head of CR and relevant heads of department. Head of compliance reports to both head of CR and head of all sourcing </li></ul><ul><li>Unified group targets: Unilever ’s Sustainable Living Plan. Simple but ambitious corporate goals, each brand must contribute to targets set </li></ul><ul><li>Ethical Corporation 2009 report (updated late 2011) “ How to embed Corporate Responsibility Across Different Parts of your Company ” looked at companies such as: </li></ul><ul><li>PepsiCo, Starbucks, TATA, Novo Nordisk, Campbell Soup, Hewlett-Packard, Vodafone and others: http://reports.ethicalcorp.com/reports </li></ul>
  20. 20. <ul><ul><li>Companies and actions: Lessons from Embedding report </li></ul></ul><ul><li>V2V – Volunteer-to-Volunteer: Starbucks </li></ul><ul><li>  </li></ul><ul><li>Starbucks -sponsored website and community that allows ANYONE – to connect and cooperate. </li></ul><ul><li>Encourages local activities that benefit communities </li></ul><ul><li>Users list and describe skills and interests </li></ul><ul><li>Separately users detail activities , or “actions”, in which they are involved, can encourage others </li></ul><ul><li>The V2V concept developed by NGO/Business partnership Comunitas in Brazil </li></ul><ul><li>Starbucks the first company to back the project. Now reaches 100,000 people : www.v2v.net </li></ul>
  21. 21. <ul><ul><li>Companies and actions: Lessons from EC’s Embedding report </li></ul></ul><ul><li>Appraisals and the balanced scorecard: Novo Nordisk </li></ul><ul><li>  </li></ul><ul><li>Novo Nordisk Employee appraisal system called 3P: People Performance Process </li></ul><ul><li>Used to rate personal performance , includes financial and non-financial targets </li></ul><ul><li>Included in staff appraisals , which take place twice a year. At the end of each full year, total performance scores based on performance against targets </li></ul><ul><li>Wide variety corporate responsibility issues included in Novo Nordisk’s balanced scorecard : Those used depend on job function </li></ul><ul><li>On qualitative measures: Assessment is made by direct line managers </li></ul>
  22. 22. <ul><ul><li>Further reading and resources / contact information </li></ul></ul><ul><li>Blog: ethicalcorp.blogspot.com (800 blog posts updated 3-4 times per week) </li></ul><ul><li>Website: www.ethicalcorp.com (seach 8000 articles since 2001, Embedding report to buy) </li></ul><ul><li>Email: [email_address] (email me for ideas, resources, training) </li></ul><ul><li>Twitter @tobiaswebb76 / Tel: +44 (0) 7912 770 277 </li></ul><ul><li>LinkedIn: uk.linkedin.com/in/ethicalcorp (Stay in touch) </li></ul><ul><li>SlideShare: http://www.slideshare.net/tobiaswebb (Free downloads) </li></ul><ul><li>Doughty Centre for Corporate Responsibility: www.doughtycentre.info </li></ul>
  23. 23. Thank you!