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  • CSR

    1. 1. Corporate Social Responsibility and Sustainable Competitiveness Djordjija Petkoski Lead Specialist, World Bank April 2003 [email_address] World Bank Institute
    2. 2. Overview <ul><li>The World Bank and WBI </li></ul><ul><li>Setting the stage and the Big Picture </li></ul><ul><li>Corporate Social Responsibility and Ethics </li></ul><ul><li>World Bank Institute </li></ul><ul><li>Raising CSR IQs </li></ul>
    3. 3. <ul><li>The World Bank and WBI </li></ul>
    4. 4. <ul><li>World Bank Group key priorities : </li></ul><ul><li>PPoverty Alleviation </li></ul><ul><li>GGood Governance </li></ul><ul><li>GGood Investment Climate </li></ul>
    5. 5. “ The World Bank as a whole has two faces – we are a lending Bank and a Knowledge Bank, positioned at a major intersection in the knowledge economy, connecting global learning opportunities with investment assistance for local development. Our role is that of facilitator, broker, connector, catalyst – WBI is our catalytic agent.” – James D. Wolfensohn, President, The World Bank
    6. 6. WBI creates learning opportunities for countries, Bank staff and clients, and people committed to poverty reduction and sustainable development.
    7. 7. <ul><li>Setting the Stage and the Big Picture </li></ul>
    8. 8. Dynamic Change: Rising Risk <ul><li>Technology, including the Internet and mass media. </li></ul><ul><li>Globalization – anti-globalization movement. </li></ul><ul><li>Stronger civil society. </li></ul><ul><li>Lack of trust in corporate America. </li></ul><ul><li>Ira Millstein: “A new world of unprecedented scrutiny.” </li></ul><ul><li>Increased importance of CSR and supporting institutions. </li></ul><ul><li>Terrorism. </li></ul>
    9. 9. Beyond the Letter of the Law <ul><li>Corporations are vigorously held to account in the court of public opinion. </li></ul><ul><li>Regulatory compliance is no longer enough. </li></ul><ul><li>Facing countless gray areas – </li></ul><ul><ul><li>Net of complex factors </li></ul></ul><ul><ul><li>Standards are continuously shifting. </li></ul></ul><ul><li>At stake is a company’s reputation. </li></ul>
    10. 10. A Risk Grid <ul><li>Short-term risk: financial market fluctuations; brand-new technology; loss of key customers or suppliers. </li></ul><ul><li>Long-term risk: demographic shifts; impact of HIV/AIDS and poverty. </li></ul><ul><li>Intrinsic risks: inside the company. </li></ul><ul><li>Extrinsic risks: outside the company. </li></ul><ul><li>___ </li></ul><ul><li>*Blue Ribbon Commission, Fall, 2002 </li></ul>
    11. 11. Risk Grid Short Term Long Term ___ *Blue Ribbon Commission, Fall, 2002 Intrinsic Extrinsic Loss of competitive position Demographic shift and poverty Employee crimes Terrorism/ terrorist acts
    12. 12. Poverty and Developing Countries <ul><li>Today: </li></ul><ul><li>3 billion people (survive on) under $2/day </li></ul><ul><li>1.2 billion people (survive on) under $1/day </li></ul>
    13. 13. Population Growth 2000 2025 2050 Developing Countries 5 billion 7 billion 8 billion Developed Countries 1 billion 1 billion 1 billion
    14. 14. Global Gross Domestic Product (GDP) <ul><li>Year 2000: </li></ul><ul><li>30 trillion – 5 billion people – 20% global GDP </li></ul><ul><li>Year 2050: </li></ul><ul><li>140 trillion – 8 billion people – 40% global GDP (assuming 3.5% growth) </li></ul>
    15. 15. <ul><li>Corporate Social Responsibility and Ethics </li></ul>
    16. 16. Competitiveness Corporate Governance Corporate Social Responsibilities Business Conduct/Ethics Leadership and Values
    17. 17. Importance of Ethics “ The best chance you have of making a big success … is to decide from square one that you are going to do it ethically ” - Alan Greenspan Chairman, Federal Reserve Board
    18. 18. Importance of Ethics “ There is no such thing as business ethics … .There ’ s just ethics; and we all have to practice them every day in everything we do. ” – Peter Drucker
    19. 19. CSR – A New Paradigm <ul><li>To think comprehensively and systematically about </li></ul><ul><li>The role of business in development </li></ul><ul><li>The manner in which the business is conducted </li></ul><ul><li>Corporate Governance </li></ul><ul><li>Poverty alleviation </li></ul><ul><li>Corporate contribution to peace and war against terror </li></ul><ul><li>Business, government and civil society partnership- common ground and collective action </li></ul>
    20. 20. Barriers to CSR <ul><li>A) Corporate Level </li></ul><ul><ul><li>Lack of leadership and vision </li></ul></ul><ul><ul><li>Too much focus on short-term goals </li></ul></ul><ul><ul><li>Inability to recognize opportunities </li></ul></ul><ul><ul><li>Lack of entrepreneurial spirit and innovation </li></ul></ul>
    21. 21. Barriers to CSR <ul><li>B) Country/Society Level </li></ul><ul><ul><li>Lack of creative pressure from the government and civil society. </li></ul></ul><ul><ul><li>Lack of support from the consumers </li></ul></ul><ul><ul><li>Lack of peer support through business associations - reluctance of other companies to follow </li></ul></ul><ul><ul><li>Lack of economic/market incentives </li></ul></ul>
    22. 23. Examples: Why we need Corporate Governance <ul><li>Russian Oil Firms </li></ul>Market Value Estimated Actual Value Discounted Ratio Firm A: $90 mn. $50 bn. 556 times less Firm B: $20 bn. $600 bn. 30 times less
    23. 24. <ul><li>World Bank Institute </li></ul>
    24. 25. Tools <ul><li>Global E-Surveys </li></ul><ul><li>Global E-Conferences </li></ul><ul><li>Web-Based Courses (Global/Country Focus) </li></ul><ul><li>Face-to-Face </li></ul><ul><ul><li>High-Profile: Awareness and Consensus </li></ul></ul><ul><ul><li>Action Plan </li></ul></ul>
    25. 26. Which of the following factors most affects public impression of individual companies? E-Survey on Corporate Social Responsibility (US 546 – World 2602)
    26. 27. E-Survey on Corporate Social Responsibility (US 546 – World 2602) Which of the following problems affects you, your family and your community the most?
    27. 28. What are the main constraints that make it difficult for companies in your country to address Corporate Governance, Corporate Social Responsibility and Business Ethics issues in a more systematic and effective way? E-Survey on Corporate Social Responsibility (US 546 – World 2602)
    28. 29. E-Survey on Corporate Social Responsibility (US 546 – World 2602) Did you reward or punish companies in the past year based on your perceived social performance?
    29. 30. E-Survey on Corporate Social Responsibility (US 546 – World 2602) What is your preferred approach to strengthening international safeguards and business conduct codes?
    30. 31. E-Conferences <ul><li>“ Global E-Conference on CSR, Education and Technology” (Nov. 18 – Dec. 7, 2002) </li></ul><ul><li>WBI and the University of Michigan Business School “E-Conference on Business, Democracy and Peace” (Oct. 7 – Nov. 1, 2002) </li></ul><ul><li>WBI and Ethics Officer Association (EOA) “E-Conference on Business Ethics and Corporate Accountability: The Search for Standards” (Sept. 9 – 27, 2002) </li></ul><ul><li>WBI and Inter-American Development Bank “Americas E-Conference on CSR” (June 10 – July 5, 2002) </li></ul><ul><li>“ Future Leaders’ E-Conference on CSR” (March 18 – April 26, 2002) </li></ul>
    31. 32. Web-Based Courses on Corporate Social Responsibility <ul><li>2550 participants/90 countries </li></ul><ul><li>Key partners: </li></ul><ul><ul><li>UN institutions: UNDP, UN Global Compact, UNIDO, UN Staff College </li></ul></ul><ul><ul><li>Academia: Wharton School of Business, University of Michigan, Higher School of Economics (Moscow) </li></ul></ul><ul><ul><li>Corporate world </li></ul></ul><ul><ul><li>Civil society </li></ul></ul>
    32. 33. <ul><li>Raising CSR IQs </li></ul>
    33. 34. Raising CSR IQs ZMET/HBS
    34. 36. “ The fundamental obstacle to CSR is that we are caged in our current ideas. This is a picture of a man inside a prison with broken-down technology – computers, clothes, lamps, and all kinds of things. If we stick with our current technology, consumption, business model, and decision-making models, this is where we will end up for sure.” – ZMET interviewee
    35. 38. “ Guy going from one side of the canyon to the other… a lot of clouds like fog. The point is going from one way of doing business to another is very tough. There’s a lot uncertainty. It takes a lot of skill, but we have to lift ourselves beyond that, above the fog, and that’s not going to be a simple exercise. CSR is about seeing the forest, the fog, and seeing how we can get on the other side, and how we can be well-equipped for doing that. So probably we need to develop additional skills, knowledge, and understanding.” – ZMET interviewee
    36. 40. “ We have some kind of salad with a human face… with a smile made with a hot pepper. So the story is that in all of our implementation challenges, we have to see that human face, identify with it… on the trees we are cutting down, the fields we are destroying… ourselves we are hurting. With some kind of creative effort, we can see that. It’s not going to be all sweet. This hot pepper will make our lives unpleasant from time to time. But I think the overall effect will be positive.” – ZMET interviewee
    37. 42. “ The message is that whatever we do today will have an impact on future generations. It’s not just my kids or your kids or somebody else’s. It’s future generations. We should not hope that the walls we build to protect ourselves will be tall enough to protect our children. Only with very conscious effort we can make the world for them a better place to live…even if we address our most selfish needs we have to address the needs of the next generation. That’s what CSR is about.” – ZMET interviewee
    38. 43. Need for partnerships <ul><li>Businesses are discovering social values </li></ul><ul><li>NPOs are discovering business principles </li></ul><ul><li>A new thinking about partnership: not an exchange but building relationships between business and NPOs. To find ways to make philanthropy serve the community and company’s business objectives. </li></ul><ul><li>The collaboration continuum </li></ul><ul><ul><li>Philanthropic (Charitable donor and recipient) </li></ul></ul><ul><ul><li>Transactional </li></ul></ul><ul><ul><li>Integrative </li></ul></ul><ul><ul><li>For more details, see : J.E. Austin “The Collaborative Challenge” Jossey Bass Publishers, 2000 </li></ul></ul>
    39. 44. Collaboration Continuum From: J.E. Austin, “ The Collaborative Challenge ” Relation type Philanthropic Transactional Integrative Level of Engagement Low High Importance to Mission Peripheral Strategic Magnitude of resources Small Big Scope of activities Narrow Broad Interaction level Infrequent Intensive Management complexity Simple Complex Strategic value Modest Major
    40. 45. Creating partnerships <ul><li>What are you trying to accomplish through the collaboration? </li></ul><ul><li>Where does your mission overlap with the potential partner’s mission? </li></ul><ul><li>Do you and your potential partner share an interest in a common group of people? </li></ul><ul><li>Do your needs match up with your partner’s capabilities, and vice versa? </li></ul><ul><li>Would the collaboration contribute significantly to your overall strategy? </li></ul><ul><li>Are your values compatible with your prospective partner’s </li></ul><ul><li>From: J.E. Austin, “The Collaborative Challenge” </li></ul>
    41. 46. UN Global Compact Course Module <ul><li>Objective </li></ul><ul><li>Increase understanding of Global Compact and main principles </li></ul><ul><ul><li>- Mission </li></ul></ul><ul><ul><li>- 9 Principles </li></ul></ul><ul><li>Design </li></ul><ul><li>What action is required from the businesses to meet the main principles of the Global Compact? </li></ul><ul><li>- the business benefits to join </li></ul><ul><li>- what companies need to do to qualify </li></ul><ul><li>- w hat do the 9 principles mean to business? </li></ul>Source: UN Global Compact (2003)
    42. 47. <ul><li>Implementation </li></ul><ul><li>Global Compact Performance Model to implement the principles </li></ul><ul><li>The Global Compact mechanisms for engagement </li></ul><ul><ul><li>Learning Forum </li></ul></ul><ul><ul><li>Policy Dialogues </li></ul></ul><ul><ul><li>Local Networks </li></ul></ul><ul><ul><li>Partnership projects </li></ul></ul>UN Global Compact Course Module Source: UN Global Compact (2003)
    43. 48. UN Global Compact Partnership <ul><li>UN Global Compact and WBI are jointly organizing: </li></ul><ul><li>A Global Compact Module for the web-based course on ‘Corporate Social Responsibility and Sustainable Competitiveness’ </li></ul><ul><li>An E-Conference on ‘The Role Of Business In Fighting HIV/AIDS’, April 21- May 9, 2003 </li></ul><ul><ul><li>The recommendations will be shared with decision-makers at the ILO and UNAIDS conference in Geneva, May 12-13, 2003 </li></ul></ul>
    44. 49. Private Sector Perspective <ul><li> “ Corporate Social Responsibility is not a cosmetic; it must be rooted in our values. It must make a difference to the way we do our business.” </li></ul><ul><ul><li>Group Managing Director </li></ul></ul>
    45. 50. <ul><li>“ You cannot talk about CSR unless you love your people and your country” </li></ul><ul><li>A student from Moscow, in opening remarks for a meeting on Russian Future Leaders and CSR, with Mrs. Wolfensohn. </li></ul>