Challenges of Corporate Social Responsibility Dr. Elijah Ezendu FIMC, FCIM, FIIAN, FBDI, FAAFM, FAAPM, FCCM, MIMIS, MITD, ACIArb, ACIPM, PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CCIP, CMC

Learning Objectives At the end of this course, participants should be able to do the following: Identify the relevance of CSR Ascertain the right model of CSR for a firm Develop effective implementation path for CSR Resolve the challenges of CSR Initiatives and craft appropriate CSR strategy

At the end of this course, participants should be able to do the following:

Identify the relevance of CSR

Ascertain the right model of CSR for a firm

Develop effective implementation path for CSR

Resolve the challenges of CSR Initiatives and craft appropriate CSR strategy

What is CSR? “ Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” Source: European Commission

“ Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis”

Source: European Commission

“ Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” Source: World Business Council for Sustainable Development

“ Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”

Source: World Business Council for Sustainable Development

“ Social responsibility (is the) responsibility of an organisation for the impacts of its decisions and activities on society and the environment through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organisation.” Source: ISO 26000 Working Group on Social Responsibility

“ Social responsibility (is the) responsibility of an organisation for the impacts of its decisions and activities on society and the environment through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organisation.”

Source: ISO 26000 Working Group on Social Responsibility

Freidman Versus Russell Milton Friedman indicated that the one and only one social responsibility of a business is to use its resources and engage in activities designed to increase its profits, as long as it stays with the rules of the game, which is to say, engages in open and free competition without deception or fraud. Kirk Russell insisted that every right is married to a duty, every freedom owns a corresponding responsibility. Hence, there cannot be genuine freedom unless there exists also genuine order in the moral realm and in the social realm.

Milton Friedman indicated that the one and only one social responsibility of a business is to use its resources and engage in activities designed to increase its profits, as long as it stays with the rules of the game, which is to say, engages in open and free competition without deception or fraud.

Kirk Russell insisted that every right is married to a duty, every freedom owns a corresponding responsibility. Hence, there cannot be genuine freedom unless there exists also genuine order in the moral realm and in the social realm.

CSR is about building Trust Trust in the brand Trust in performance of the product Trust in the company to “do the right thing” Trust in you as an employer Source: Carrie Johnson, Corporate Social Responsibility

Trust in the brand

Trust in performance of the product

Trust in the company to “do the right thing”

Trust in you as an employer

Source: Carrie Johnson, Corporate Social Responsibility

Major Elements of CSR

Dimensions of CSR Internal Dimension: This focuses on organisational practices with respect to internal stakeholders that should be aligned to corporate social responsibility standards. External Dimension: This focuses on an organisations practices towards external stakeholders which should be in accordance with international standards of business practices.

Internal Dimension: This focuses on organisational practices with respect to internal stakeholders that should be aligned to corporate social responsibility standards.

External Dimension: This focuses on an organisations practices towards external stakeholders which should be in accordance with international standards of business practices.

Internal Dimension

External Dimension

“ There is no way to avoid paying serious attention to corporate citizenship: The costs of failing are simply too high…There are countless win-win opportunities waiting to be discovered: Every activity in a firm’s value chain overlaps in some way with social factors – everything from how you buy or procure to how you do your research – yet very few companies have thought about this. The goal is to leverage your company’s unique capabilities in supporting social causes, and improve your competitive context at the same time. The job of today’s leaders is to stop being defensive and start thinking systematically about corporate responsibility.” - Michael Porter, Professor, Harvard Business School

“ There is no way to avoid paying serious attention to corporate citizenship: The costs of failing are simply too high…There are countless win-win opportunities waiting to be discovered: Every activity in a firm’s value chain overlaps in some way with social factors – everything from how you buy or procure to how you do your research – yet very few companies have thought about this. The goal is to leverage your company’s unique capabilities in supporting social causes, and improve your competitive context at the same time. The job of today’s leaders is to stop being defensive and start thinking systematically about corporate responsibility.”

- Michael Porter, Professor, Harvard Business School

Corporate Responsibilities

Four Phases of CSR Corporate Social Stewardship (1950s – 1960s) Corporate Social Responsiveness (1960s – 1970s) Corporate/ Business Ethics (1980s – 1990s) Corporate/ Global Citizenship (1990s – 2000s)

Corporate Social Stewardship (1950s – 1960s)

Corporate Social Responsiveness (1960s – 1970s)

Corporate/ Business Ethics (1980s – 1990s)

Corporate/ Global Citizenship (1990s – 2000s)

Models of CSR Position Responsible to Action Minimalist (Premodern) Stockholders/Owners Maximizes Profit Self-Interested (Premodern) Stockholders/Owners/Cost controllers Focus on services that enhance profit and corporate growth Social Contract (Modern) Entities with social and legal contract Commitment to social services Stakeholder Management (Postmodern) Entities that influence direction and fortune Deployment of responsive strategies Stakeholder Stewardship (Postmodern) The whole society Solutions for social problems

Features of Minimalist CSR Model Premises - Shareholders dominance - Legal bond Critique - Every other model disturb profit - Other models are socialist

Premises - Shareholders dominance - Legal bond

Critique - Every other model disturb profit - Other models are socialist

Features of Self-Interested CSR Model Premises - promote philanthropy - reputation Critique - Minimalist is too rigid

Premises - promote philanthropy - reputation

Critique - Minimalist is too rigid

Features of Social Contract CSR Model Premise - Power and responsibility are always together - Organisation is a moral entity - Existence of contract with society Critique - Minimalist and Self-Interested are focused on profit

Premise - Power and responsibility are always together - Organisation is a moral entity - Existence of contract with society

Critique - Minimalist and Self-Interested are focused on profit

Features of Stakeholder Management CSR Model Premise - Focuses on primary and secondary stakeholder groups Critique - The social contract model is too vague

Premise - Focuses on primary and secondary stakeholder groups

Critique - The social contract model is too vague

Stakeholder Groups

Features of Stakeholder Stewardship CSR Model Premise - Concerned about tertiary stakeholders - Focuses on high ideals - Provide for non- beneficiary entities - Cleave to trust Critique - Stakeholder management model is not very ambitious

Premise - Concerned about tertiary stakeholders - Focuses on high ideals - Provide for non- beneficiary entities - Cleave to trust

Critique - Stakeholder management model is not very ambitious

Issues of Trust and Change in Models of CSR Model Participants Change Issues Trust Minimalist Investors/Stockholders, Owners/managers Hyper competition, globalisation Growth of trust depends on extent of performance compared to expectation Self Interested Program advocates, owners/managers Competition, upgrading of reputation Growth of trust depends on extent of projected corporate reputation Social Contract Owners/managers, Entities that engage in contract with firm Flexibility, internationalization Growth of trust depends on how well the legal and social contracts are sustained Stakeholder Management Primary and Secondary Stakeholders, Owners/managers Information management, public inquest Growth of trust depends on level of inclusiveness in decision-making processes Stakeholder Stewardship Representatives of tertiary stakeholders, owners/managers Demands for tertiary stakeholders, environmental activism Growth of trust depends on success of negotiated agreements between the corporation and representatives of tertiary stakeholders

Factors that Promote CSR Globalization Advances in Communication Sustainable development Governance Leadership Competitive Advantage Consumerism Advocacy Ethical Culture

Globalization

Advances in Communication

Sustainable development

Governance

Leadership

Competitive Advantage

Consumerism

Advocacy

Ethical Culture

CSR versus Law Organisations tend to choose between legal compliance mentality and ethical compliance mentality. Legal compliance mentality focuses on observance of laws pertaining to health and safety, environmental protection, bribery and corruption, taxation, consumers, corporate governance, workers and human rights. Ethical Compliance mentality directs proactive activities towards furthering sustainable development and CSR engineered innovation while acting in pursuit of business excellence

Organisations tend to choose between legal compliance mentality and ethical compliance mentality.

Legal compliance mentality focuses on observance of laws pertaining to health and safety, environmental protection, bribery and corruption, taxation, consumers, corporate governance, workers and human rights.

Ethical Compliance mentality directs proactive activities towards furthering sustainable development and CSR engineered innovation while acting in pursuit of business excellence

CSR Implementation Framework Source: Paul Hohnen, Corporate Social Responsibility, An Implementation Guide Plan Do Check Improve What? (Task Delineation) How? (Checkpoints on the journey) 1. Conduct a CSR assessment Assemble a CSR team Develop a working definition of CSR Identify legal requirements Review corporate documents, processes and activities, and internal capacity Identify and engage key stakeholders 2. Develop a CSR strategy Build support with CEO, senior management and employees Research what others are doing, and assess the value of recognized CSR instruments Prepare a matrix of proposed CSR actions Develop ideas for proceeding and the business case for them Decide on direction, approach, boundaries and focus areas 3. Develop CSR commitments Do a scan of CSR commitments Hold discussions with major stakeholders Create a working group to develop the commitments Prepare a preliminary draft Consult with affected stakeholders 4. Implement CSR commitments Develop an integrated CSR decision-making structure Prepare and implement a CSR business plan Set measurable targets and identify performance measures Design and conduct CSR training Establish mechanisms for addressing problematic behaviour Create internal and external communication plans Make commitments public 5. Assure and report on progress Measure and assure performance Engage stakeholders Report on performance, internally and externally 6. Evaluate and improve Evaluate performance Identify opportunities for improvement Engage stakeholders

Assemble a CSR team

Develop a working definition of CSR

Identify legal requirements

Review corporate documents, processes and activities, and internal capacity

Identify and engage key stakeholders

Build support with CEO, senior management and employees

Research what others are doing, and assess the value of recognized CSR instruments

Prepare a matrix of proposed CSR actions

Develop ideas for proceeding and the business case for them

Decide on direction, approach, boundaries and focus areas

Do a scan of CSR commitments

Hold discussions with major stakeholders

Create a working group to develop the commitments

Prepare a preliminary draft

Consult with affected stakeholders

Develop an integrated CSR decision-making structure

Prepare and implement a CSR business plan

Set measurable targets and identify performance measures

Design and conduct CSR training

Establish mechanisms for addressing problematic behaviour

Create internal and external communication plans

Make commitments public

Measure and assure performance

Engage stakeholders

Report on performance, internally and externally

Evaluate performance

Identify opportunities for improvement

Engage stakeholders

CSR Strategy This is a firm’s road map for accomplishing its obligations in corporate social responsibilities and should consider factors such as stakeholder interests, competitors’ CSR inclinations, priority areas, acceptable approach and process for ascertainment of performance.

This is a firm’s road map for accomplishing its obligations in corporate social responsibilities and should consider factors such as stakeholder interests, competitors’ CSR inclinations, priority areas, acceptable approach and process for ascertainment of performance.

Common Mistakes in CSR Lack of vision Scale of change Sub-strategic management Risk/opportunity roles Selective hearing Maintaining old structures “ One World” approaches Uneven approaches Non-participative management Failure to see CSR as innovation Source: Anders & Winst Company

Lack of vision

Scale of change

Sub-strategic management

Risk/opportunity roles

Selective hearing

Maintaining old structures

“ One World” approaches

Uneven approaches

Non-participative management

Failure to see CSR as innovation

Source: Anders & Winst Company

Factors to Consider in business case for CSR Areas in which a company can build competitive advantage Short and Long term goals Benefits Higher cost efficiency for organisational activities Risk of each opportunity Influence of stakeholders Areas of great gain Cost of implementation Implications of programme

Areas in which a company can build competitive advantage

Short and Long term goals

Benefits

Higher cost efficiency for organisational activities

Risk of each opportunity

Influence of stakeholders

Areas of great gain

Cost of implementation

Implications of programme

“ We believe that the leading global companies of 2020 will be those that provide goods and services and reach new customers in ways that address the world’s major challenges – including poverty, climate change, resource depletion, globalization, and demographic shifts.” - Niall Fitzgerald, Former CEO & Chairman, Unilever

“ We believe that the leading global companies of 2020 will be those that provide goods and services and reach new customers in ways that address the world’s major challenges – including poverty, climate change, resource depletion, globalization, and demographic shifts.”

- Niall Fitzgerald, Former CEO & Chairman, Unilever

International CSR Initiatives Posing Challenges to Firms United Nations Global Compact World Summit on Sustainable Development OECD Guidelines on Multinational Enterprises ISO 26000 ISO 9001 ISO 14001 OHSAS 18001 OECD Principles of Corporate Governance Social Accountability 8000 Global Reporting Initiative World Business Council for Sustainable Development Environmental and Social Standards of International Finance Corporation International Labour Standards of International Labour Organisation Equator Principles Principles for Responsible Investment United Nations Human Rights Instruments Transparency International Business Principles Voluntary Principles on Security and Human Rights

United Nations Global Compact

World Summit on Sustainable Development

OECD Guidelines on Multinational Enterprises

ISO 26000

ISO 9001

ISO 14001

OHSAS 18001

OECD Principles of Corporate Governance

Social Accountability 8000

Global Reporting Initiative

World Business Council for Sustainable Development

Environmental and Social Standards of International Finance Corporation

International Labour Standards of International Labour Organisation

Equator Principles

Principles for Responsible Investment

United Nations Human Rights Instruments

Transparency International Business Principles

Voluntary Principles on Security and Human Rights

Ghana Business Code It’s a private sector led initiative developed in collaboration with a development partner for implementation of UN Global Compact Principles. In the course of aligning the 10 Principles of UNGC to local standards in Ghana, a new product containing 55 point prescriptions was established as Ghana Business Code.

It’s a private sector led initiative developed in collaboration with a development partner for implementation of UN Global Compact Principles. In the course of aligning the 10 Principles of UNGC to local standards in Ghana, a new product containing 55 point prescriptions was established as Ghana Business Code.

Examples of Ethical Compliance to Challenges of CSR Jebsen & Jebsen stopped producing chainsaws in order to stop contributing to deforestation. Toyota’s commitment to champion zero emmission by producing Prius hybrid petrol/electric model.

Jebsen & Jebsen stopped producing chainsaws in order to stop contributing to deforestation.

Toyota’s commitment to champion zero emmission by producing Prius hybrid petrol/electric model.

Exercise The high level of advocacy for corporate social responsibility influenced Maris & Patty to consider development of CSR strategy. The firm manufactures batteries with various chemicals that contribute to environmental hazards within its host community. What shall be your recommendation appertaining to its CSR strategy, implementation and focus.

The high level of advocacy for corporate social responsibility influenced Maris & Patty to consider development of CSR strategy. The firm manufactures batteries with various chemicals that contribute to environmental hazards within its host community. What shall be your recommendation appertaining to its CSR strategy, implementation and focus.

Dr. Elijah Ezendu is a multidisciplinary professional whose business experience mounts through diverse fields. He is a Certified Management Consultant, licensed by International Council of Management Consulting Institutes which has a Special Consultative Status in United Nations Economic and Social Council. As a result of his strides in management consulting, he received Merit Award for Excellence in Consulting. He is concurrently Senior Partner, Shevach Consulting; Director of Strategy and Performance, Fortuna; Lead Assessor and Member of Governing Council, Institute of Management Consultants; Director of Training, International Council of Business Development Professionals; Member of Marketing Committee, International Council of Management Consulting Institutes; Honorary Global Advisor, International Project Management Commission; and Programme Coordinator (Nigeria), Regent Business School, South Africa. He holds a doctoral degree in Management from St. Clements University, British West Indies. He is a Chartered Manager certified by Canadian Institute of Management, Canada and holds numerous professional qualifications including Master Project Manager; Project Manager E-Business; Fellow, Institute of Management Consultants; Fellow, Certified Institute of Cost Management; Fellow, Institute of Business Development; Fellow, American Academy of Financial Management; Fellow, Institute of Internal Auditors; Member, Nigerian Institute of Training and Development; Member, Institute of Analytics Professionals; Associate, Chartered Institute of Personnel Management of Nigeria; Associate, Chartered Institute of Arbitrators (Nigeria). He is a Certified Business Development Analyst and Competitive Intelligence Professional. Additionally, he is an information technology management professional certified by Institute for the Management of Information Systems, UK along with Microsoft Corporation, USA and stands as a Member of International Association of Software Architects. He is an outstanding motivational speaker with a knack for recalibration of positive influence; and a world-class consultant, who has functioned as Speaker/Facilitator at myriad programmes of professional institutes, international development organisations, private and public firms including extra-governmental agencies and institutions. He is a prolific writer and author who had served as Editor-in-Chief, Cost Management Journal; Part-Time Lecturer & External Examiner (MBA Programme), Ladoke Akintola University of Technology; Director of MBA Programme (Nigerian Outreach), Management Institute of Canada; Chief Operating Officer, Rohan Marine; Second Vice President and Member of Governing Council, Certified Institute of Cost Management; Director of Programmes and Member of Governing Council, The Institute of Business Development; Director, Refined Shipping; and Examiner to various Professional Institutes.

Dr. Elijah Ezendu is a multidisciplinary professional whose business experience mounts through diverse fields. He is a Certified Management Consultant, licensed by International Council of Management Consulting Institutes which has a Special Consultative Status in United Nations Economic and Social Council. As a result of his strides in management consulting, he received Merit Award for Excellence in Consulting. He is concurrently Senior Partner, Shevach Consulting; Director of Strategy and Performance, Fortuna; Lead Assessor and Member of Governing Council, Institute of Management Consultants; Director of Training, International Council of Business Development Professionals; Member of Marketing Committee, International Council of Management Consulting Institutes; Honorary Global Advisor, International Project Management Commission; and Programme Coordinator (Nigeria), Regent Business School, South Africa. He holds a doctoral degree in Management from St. Clements University, British West Indies. He is a Chartered Manager certified by Canadian Institute of Management, Canada and holds numerous professional qualifications including Master Project Manager; Project Manager E-Business; Fellow, Institute of Management Consultants; Fellow, Certified Institute of Cost Management; Fellow, Institute of Business Development; Fellow, American Academy of Financial Management; Fellow, Institute of Internal Auditors; Member, Nigerian Institute of Training and Development; Member, Institute of Analytics Professionals; Associate, Chartered Institute of Personnel Management of Nigeria; Associate, Chartered Institute of Arbitrators (Nigeria). He is a Certified Business Development Analyst and Competitive Intelligence Professional. Additionally, he is an information technology management professional certified by Institute for the Management of Information Systems, UK along with Microsoft Corporation, USA and stands as a Member of International Association of Software Architects. He is an outstanding motivational speaker with a knack for recalibration of positive influence; and a world-class consultant, who has functioned as Speaker/Facilitator at myriad programmes of professional institutes, international development organisations, private and public firms including extra-governmental agencies and institutions. He is a prolific writer and author who had served as Editor-in-Chief, Cost Management Journal; Part-Time Lecturer & External Examiner (MBA Programme), Ladoke Akintola University of Technology; Director of MBA Programme (Nigerian Outreach), Management Institute of Canada; Chief Operating Officer, Rohan Marine; Second Vice President and Member of Governing Council, Certified Institute of Cost Management; Director of Programmes and Member of Governing Council, The Institute of Business Development; Director, Refined Shipping; and Examiner to various Professional Institutes.

Thank You Dr. Elijah Ezendu elezendu@yahoo.com, 234 8033024596, 234 8058835237