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Global hr forum2007-iwao taka-corporate social responsibility and challenges by japanese corporations
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    Global hr forum2007-iwao taka-corporate social responsibility and challenges by japanese corporations Global hr forum2007-iwao taka-corporate social responsibility and challenges by japanese corporations Presentation Transcript

    • Corporate Social Responsibility and Challenges by Japanese Corporations Iwao Taka, Dr. Professor at Reitaku University Reitaku Business Ethics and Compliance Research Center (R-bec) Global Human Rights Forum October 24, 2007, Korea 1
    • Topics I. Why is CSR required? Globalization, WTO, and ISO26000 II. How domains of CSR are related? Legal Compliance, Ethical Practice, and Social Contribution III. Typical CSR challenges taken by Leading Japanese corporations in the past 5 years. 2
    • I. Why is CSR required? (1) Globalization: Fundamental Reason (2) Mitigating Criticisms Against WTO by Reducing Poverty TRIPs (Trade-Related Aspects of Intellectual Property Rights) GATS (General Agreement on Trade in Services) NGOs believe that WTO frameworks such as TRIPs and GATS will not bring substantial benefits to developing countries. Therefore they accuse globalization backed by WTO, suggesting that it will not help poor countries get out of poverty. 3
    • I. Why is CSR required? (2) Mitigating Criticisms Against WTO by Reducing Poverty According to Prof. Jeffrey Sachs, a head of the UN Millennium Project, globalization has been reducing poverty. He also suggests that if only 0.7% of GNP of industrialized countries is invested in basic infrastructure (transportation, electricity, water, soil development, hygiene, epidemic prevention, medical care) and human resources (education) of the poorest countries, the poverty issue will be solved within a couple of decades to come. Regarding the Millennium Project, not only governments of industrialized countries but also global corporations could somehow contribute to improving basic infrastructure and human resources. Since corporations have very competitive technology, know-how, skilled and talented staff, well-organized networks, and ways to operate with high efficiency, they might do it far more effectively than governments do alone. 4
    • II. How domains of CSR are related? Three Phases in CSR Phase (2) Phase (3) Ethical Practices Social Contributions Do Right Help Others Report Results Full Be Honest Improve Community Be Fair Promote Human Degnity Spirit of Laws Be Courageous Phase (1) Phase (2) Legal Compliance Ethical Practices Not Do Wrong Not Harm Others Report Processes Basic Not to be Deceptive Not Harm Community Do not Steal Respect Human Rights Letter of Laws Be Considerate Justice Humanity Adapted and changed from Value Shift, written by Lynn Sharp Paine 5
    • II. How domains of CSR are related? Phase I: Legal Compliance Legal compliance is a very basic requirement of CSR. But this does not mean that complying with relevant laws and regulations is very easy. Nonetheless, if corporations stay at this level with difficulty as an excuse, they might end up with creating dishonest corporate culture. Phase II: Ethical Practice Corporations at this level try to understand what purposes those laws aim to achieve, and taking those purposes into account, they make efforts to comply with the laws. Corporations at this level try not to harm citizens, workers, local communities, natural environment and future generations, even if those acts are not legally required. 6
    • II. How domains of CSR are related? Phase III: Social Contribution That is to help others, to promote human dignity, to develop environmentally friendly technologies, or to increase positive influences over societies and future generations. It is sometimes noted that an act of social contribution could be used as a means to overcome ethical dilemmas. eg., a decision made by a beverage company (1) The company received the permission to do business there. (2) The official also received some benefits from the company’s decision. (3) Current and future generations of this country would also receive benefits. 7
    • III. Typical CSR challenges taken by Leading Japanese corporations Ethical Practice i) Making or revising codes of conduct ii) Materializing implementation plans iii) Clarifying top’s commitment to ethics and CSR iv) Establishing CSR-related sections v) Conducting risk-specific ethics trainings, and vi) Introducing internal ethics helpline and using third-party service providers 8
    • III. Typical CSR challenges taken by Leading Japanese corporations i) Making or revising codes of conduct According to Keidanren’s research, 86% of the member corporations have already adopted codes of conduct. (CASE: Food Processing Company, Railway Company) Leading corporations have been revising in a way to reflect opinions of employees on their codes of conduct. Both companies made very effective user-friendly codes, and successfully raised employees’ awareness, morale, as well as a sense of participation. ii) Materializing implementation plans (CASE: Carmakers and Cap & Trade) Under the Clean Development Mechanism, if a carmaker emits more greenhouse gases than its baseline, it has to purchase CERs from the market. An intriguing point of this framework is that each carmaker is given a different baseline. Therefore, they might confuse the order of things. Aiming to acquire more allowances, some carmakers might make serious efforts to acquire other automakers with large allowances. In order to avoid succumbing to such hypocrisy, leading Japanese automakers have made concrete implementation plans 9
    • III. Typical CSR challenges taken by Leading Japanese corporations iii) Clarifying top’s commitment to ethics and CSR (CASE: Electronic Giant and Recall) In early 2005, an electronic giant received reports that users of the company’s products, kerosene fan heaters, suffered carbon monoxide poisoning. It found that the heaters were manufactured from 1985 through 1992. They were so old that rubber hoses of the heaters became fragile, accidentally causing imperfect combustion. Therefore it started to replace rubber hoses, but in the midst of replacing, in November 2005, another accident happened to an already fixed heater. Facing this, in late 2005 it decided to recall all the fan heaters of this type and buy them back at the price of 50,000 yen (about 450 dollars). Using year-end and New Year’s TV commercials, almost every 15 minutes, the company apologized and asked for all the TV viewers to check their fan heaters (using all the major channels), and if they have the type, to report immediately to the company’s customer services. In addition, it sent 60 million special postcards to all the residences in Japan, which warn the risk of the fan heater. Similar leaflets inserted everyday in major newspapers for a couple of weeks. Its employees handed out a similar special leaflet to as many pedestrians as possible on the street. In early 2006, the total number of employees engaged in this thorough effort exceeded 130,000, and the total recall cost reached 24 billion yen (about 200 million dollars). iv) Establishing CSR-related sections (CASE: leading Japanese trading company) 10
    • III. Typical CSR challenges taken by Leading Japanese corporations v) Conducting risk-specific ethics trainings (CASE: Insider Trading and Donation Box) Several sections at a printing company might get insider information of capital increase of other companies. Taking advantage of this, some employees of those sections might trade shares in question. Therefore, in the case of such sections at a printing company, focusing on this risk, it prepares a specific ethics training designed to prevent employees from involving in insider trading. Put it differently, the same training does not necessarily need to be given to employees of other jobs or other sections. Employees of other jobs like salespersons at a supermarket usually do not have insider-trading risks. Therefore, if risks are dissimilar, different types of training programs should be prepared. vi) Introducing internal ethics helpline, using 3rd party service providers (CASE: Third Party Service Providers) Employees feel uncomfortable about reporting under real name. Therefore, many corporations have introduced an in-house system in which employees can report anonymously (77.7% of Keidanren’s members). Yet, they still feel uncomfortable, because this is basically controlled by corporations. Even if they dare to use the system, there still remains another problem. When the ethics office cannot find anything wrong the reporter mentioned, it has no choice but to stop investigation. For the purpose of overcoming such an obstacle, leading corporations have introduced third party channels like an e-mail service providers as well as independent lawyers (47.3%). 11
    • III. Typical CSR challenges taken by Leading Japanese corporations Social Contribution i) Basic Infrastructure (soil development, hygiene, epidemic prevention, medical care, etc.) ‡@ Toyota Motor and Charitable Foundation: Medical and Dental Outreach Program ‡A Yamanashi Hitachi Construction Machinery: Challenges against 110 million antipersonnel landmines, Landmine Clearance Program ‡B Sumitomo Chemical: Challenges against Malaria Roll Back Malaria Campaign, Mosquito nets to save over 500,000 lives ii) Human Resources (Education) ‡@ Toyota Motor and NGOs: Training Program for Teachers and Administrators ‡A Mitsui & Co.: Doi Tung Development Project, Library Gift Project ‡B Sumitomo Group Four Corporations: Constructing Elementary Schools Sumitomo Chemical, Sumitomo Trust & Banking, Sumitomo Life Insurance, MSIG (Mitsui Sumitomo Insurance Group) 12