Challenges Of Corporate Social Responsibility


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Issues in development of workable corporate social responsibility strategy and resolution of awe-inspiring stance for championing effective governance.

  • There's a new movement for change in corporate governance compass, requiring mandatory recognition and reward to other providers of capital instead of focusing only on providers of financial capital (shareholders). Malaysia, Indonesia, Mauritius and India have woken up to ensure transparency and equity in framework for corporate returns by stipulating mandatory CSR, but its simply the beginning of an era. There's need for appropriate ascertainment, recognition and reward for all capital providers. Check
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Challenges Of Corporate Social Responsibility

  1. 1. Challenges of Corporate Social Responsibility Dr. Elijah Ezendu FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM, PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr
  2. 2. 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
  3. 3. 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
  4. 4. “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
  5. 5. “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
  6. 6. 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.
  7. 7. 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
  8. 8. Major Elements of CSR
  9. 9. 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.
  10. 10. Internal Dimension
  11. 11. External Dimension
  12. 12. “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
  13. 13. Corporate Responsibilities
  14. 14. Four Phases of CSR • Corporate Social Stewardship (1950s – 1960s) • Corporate Social Responsiveness (1960s – 1970s) • Corporate/ Business Ethics (1980s – 1990s) • Corporate/ Global Citizenship (1990s – 2000s)
  15. 15. 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
  16. 16. Features of Minimalist CSR Model • Premises - Shareholders dominance - Legal bond • Critique - Every other model disturb profit - Other models are socialist
  17. 17. Features of Self-Interested CSR Model • Premises - promote philanthropy - reputation • Critique - Minimalist is too rigid
  18. 18. 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
  19. 19. Features of Stakeholder Management CSR Model • Premise - Focuses on primary and secondary stakeholder groups • Critique - The social contract model is too vague
  20. 20. Stakeholder Groups
  21. 21. 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
  22. 22. 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
  23. 23. Factors that Promote CSR Globalization Advances in Communication Sustainable development Governance Leadership Competitive Advantage Consumerism Advocacy Ethical Culture
  24. 24. CSR versus Law Organizations 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
  25. 25. CSR Implementation Framework 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 Source: Paul Hohnen, Corporate Social Responsibility, An Implementation Guide Plan Do Check Improve
  26. 26. 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.
  27. 27. 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
  28. 28. 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
  29. 29. “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
  30. 30. 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
  31. 31. 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.
  32. 32. Examples of Ethical Compliance to Challenges of CSR • Jebsen & Jessen stopped producing chainsaws in order to stop contributing to deforestation. • Toyota’s commitment to champion zero emission by producing Prius hybrid petrol/electric model.
  33. 33. 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.
  34. 34. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Business Development, Marketing, Project Management, Cost Management, Leadership, HR, CSR, eBusiness and Software Architecture. He is currently CEO, Rubiini (UAE); Hon. President, Worldwide Independent Inventors Association; Special Advisor, RTEAN; Director, MMNA Investments Limited. He had functioned as Chair, Int’l Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training), Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles), Fortuna, Gambia & Malta; Director, The Greens; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping; Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Country Manager (Nigeria) & Adjunct Faculty, Regent Business School, South Africa; Adjunct Faculty, Ladoke Akintola University of Technology; Editor-in-Chief & Chairman of Editorial Board, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He's an author and widely featured speaker, who has been involved in developing Executive Programme Content for Universities. He also serves on Boards of Companies as Non-Executive Director.
  35. 35. Thank You