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On Course for a Better World

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Partnerships in the Danish Shipping Industry

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On Course for a Better World

  1. 1. 1 On Course for a Better World Phase II: PARTNERSHIPS IN THE DANISH SHIPPING INDUSTRY An inspirational guide to engage in partnerships Prepared by: Janni Thusgaard Pedersen Louise Kjaer and with support and input from CSR on Board, Helle Johansen September 2012 The  project  ”On  Course  for  a  Better  World”  is  initiated  by  The Danish Business Authority and The  Danish  Shipowners’  Association.  The  project  is  financed  by  The  Danish  Maritime  Fund,  The   Lauritzen Foundation, Orients Fond (NORDEN) and The TORM foundation. The aim of the project is to document how Danish shipping industry creates social, environmental and economic value globally, and inspire Danish shipping companies to strengthen their work with social, environmental and economic sustainability issues.
  2. 2. 2 Executive summary This report is addressed to the Danish shipping industry and discusses the potential advantages for shipping companies of engaging in partnerships. It is intended as an inspirational guide that can assist the industry in implementing responsible and sustainable business practices through partnerships. A growing number of corporations have come to realise that the manner in which they conduct business can have a significant impact on the environment as well as on society. Leading corporations have demonstrated that there is no contradiction between running a profitable business and dealing diligently with impacts on sustainability – quite the contrary. At the same time, there are increased political and societal expectations of corporations to act responsibly and make business models more sustainable. However, sustainability is often linked to complex political processes and societal contexts, which can be best challenged when joining forces with other actors. Partnerships have therefore become an effective means for businesses when demonstrating corporate social responsibility (CSR) as they allow partners to utilise and benefit from their joint expertise. The report asserts that the benefits of engaging in partnerships depend on the scale of involvement and on which actors are involved. Some of the direct benefits to businesses can include increased brand value, attraction of talents and access to specialised knowledge and expertise. Partnerships can also produce joint benefits for partners, including the possibility to address greater structural issues in society composing barriers for the industry or business as such. Partnerships can present opportunities of long-term engagement on relevant issues and enable businesses to influence legislation and create industry standards. Seen from a CSR point of view, partnerships present an opportunity to increase impacts when going beyond compliance and creating strategic value. However, partnerships may also be the most effective way to prevent and mitigate the corporation’s   adverse   impacts   in   society.   Whereas   corporations   cannot   be   forced   into   partnerships,   partnerships  may  often  prove  more  effective  to  address  the  companies’  challenges  and  therefore  more   cost-effective. The report seeks to provide the shipping companies with an overview of the many reasons for engaging in partnerships, who to partner with and how to get the most out of partnerships in addition to outlining key considerations in a phased approach to engage in partnerships. Partnerships cover a vast area of activities. In order to target key considerations typologies are used to describe different kinds of partnerships, i.e. Public-Private Partnerships, Private-Nonprofit Partnerships Business to Business Partnerships, and Global Public-Private Partnerships. In addition partnerships take many forms depending on the level of commitment. Three levels of engagement are described in the report: 1. Transactional Engagement – providing for sponsorships or donations; 2. Transitional partnerships – integrating CSR activities into core business; and 3. Transformative partnerships – generating innovative solutions to sustainability challenges The use of partnerships with UN organisations, local governments and NGOs, is particularly relevant where the partnership aims to create cultural changes in local communities beyond the shipping industry’s  own  employees.
  3. 3. 3 Table of Contents PARTNERSHIPS IN THE DANISH SHIPPING INDUSTRY.......................................................................1 Executive summary.......................................................................................................................2 Abbreviations ...............................................................................................................................5 Background for the report..............................................................................................................6 Context....................................................................................................................................6 Purpose and target group...........................................................................................................8 Methodology.............................................................................................................................8 How to use the inspirational material ...........................................................................................8 What are partnerships and CSR? .................................................................................................. 10 What is a partnership? ............................................................................................................. 10 Definition............................................................................................................................ 11 What is corporate social responsibility, CSR? .............................................................................. 11 Context of partnerships............................................................................................................ 11 Why engage in a partnership? ...................................................................................................... 13 Benefits to the Company .......................................................................................................... 13 Head-off trouble .................................................................................................................. 13 Accelerate innovation ........................................................................................................... 14 Foresee shifts in demands..................................................................................................... 15 Enhance corporate image...................................................................................................... 16 Joint benefits .......................................................................................................................... 18 Pooling of resources ............................................................................................................. 18 Set industry standards.......................................................................................................... 19 Shape legislation ................................................................................................................. 20 Create a shared platform ...................................................................................................... 20 Reasons for Partners to engage in Partnerships ....................................................................... 21 Potential challenges in partnerships........................................................................................ 22 Who to partner with? .................................................................................................................. 23 Public-Private Partnerships.................................................................................................... 26 Private-Nonprofit-Partnerships............................................................................................... 28 Business to Business- Partnerships......................................................................................... 29 Global Public-Private Partnerships .......................................................................................... 29 Level of engagement ............................................................................................................... 31 Transactional Engagement – providing sponsorships or charity .................................................. 32 Transitional partnerships – integration of CSR activities into core business.................................. 34 Transformative partnerships – generation of innovative solutions............................................... 35 How to get the most out of partnerships........................................................................................ 39 How to engage in partnerships ..................................................................................................... 41
  4. 4. 4 The partnership phases............................................................................................................ 41 Formation ........................................................................................................................... 42 Initiation............................................................................................................................. 43 Implementation ................................................................................................................... 44 Evaluation........................................................................................................................... 46 Steps to engage in a partnerships ............................................................................................. 46 FORMATION ........................................................................................................................ 48 INITIATION ......................................................................................................................... 49 IMPLEMENTATION................................................................................................................ 49 EVALUATION ....................................................................................................................... 49 Literature .................................................................................................................................. 50 Internet sources...................................................................................................................... 51 Appendix 1 ................................................................................................................................ 52 Why engage in partnerships ..................................................................................................... 52 Who to partner with? ............................................................................................................... 54 Level of engagement ............................................................................................................ 57 How to get the most out of partnerships .................................................................................... 61 Steps to engage in a partnerships .......................................................................................... 64 FORMATION ........................................................................................................................ 64 INITIATION ......................................................................................................................... 65 IMPLEMENTATION................................................................................................................ 65 EVALUATION ....................................................................................................................... 65
  5. 5. 5 Abbreviations B2B Business to Business partnerships CSR Corporate Social Responsibility GPPPs Global Public –Private Partnerships MACN Maritime Network on Anti-Corruption MDGs Millennium Development Goals NGOs Non-Governmental Organisations NPOs Non-profit organisations PNPs Private – Non-profit organisation Partnerships PPPs Public-Private Partnerships RSCM Responsible Supply Chain Management UNGPs United Nations Guiding Principles on Business and human rights
  6. 6. 6 Background for the report Context Since its launch in year 2000, the UN Global Compact has gained widespread acceptance and authority among businesses worldwide. Throughout the years, the UN Global Compact has come to set the agenda within CSR internationally and has guided many businesses to become more sustainable and responsible in their operations. Also the Danish shipping industry has acknowledged the importance and value of active engagement with the basic principles for sustainability through their corporate activities. The UN Global Compact plays a central role for this effort and provides a common frame and direction for the work that Danish shipping companies do in relation to CSR. The UN Global Compact is in itself a global partnership between a variety of stakeholders, and the UN Global Compact promotes partnerships as a means of achieving sustainable development: “The  UN  Global  Compact  asks  companies to: 1. Internalize the ten principles in their business strategy and operations, and 2. Take action and engage in partnerships to advance the broader UN goals, such as the Millennium  Development  Goals  (MDGs).”1 The United Nations acknowledges the value and need for partnerships to achieve sustainable development. The formation of the UN Global Compact was based on realisation that governments needed to partner with business around the basic international principles for social, environmental and economic sustainability in order to realise the vision of their implementation and thus enhanced sustainability. This  is  reflected  in  the  UN  Secretary  General’s  understanding  of  partnerships:   “Partnerships   are   commonly   defined   as   voluntary   and   collaborative   relationships between various parties, both State and non-State, in which all participants agree to work together to achieve a common purpose or undertake a specific task and to share risks, responsibilities, resources, competencies and benefits." 2 From a corporate perspective CSR consists of two dimensions both necessary to enhance and protect the financial value of the company:  Compliance Expectation: On one hand corporations need to ensure that they do not contribute to adverse impacts on the international principles for sustainable development as defined by the UN Global Compact principles. The UN Guiding Principles on Business and Human Rights from 2011 (the UNGPs) with their implementation in the OECD Guidelines, in the definition of and strategy on CSR by the EU Commission and by the Danish Government in its national action plan have improved considerably the opportunities for businesses to get compliance ‘right’.  A  common   global reference point for how to avoid adverse impacts on the principles for sustainable development increases the opportunities for cost-efficiency in implementation; especially in the longer term. The compliance part of CSR in alignment with the UN Global Compact and the UNGPs was explored in relation to responsible supply chain management in a separate delivery under  Phase  II  of  this  project;;  confer  the  inspirational  material:  “Making  the  UN  Global  Compact   operational in alignment with The UN Guiding Principles on Business and Human Rights in relation 1 See: http://www.unglobalcompact.org/issues/partnerships/index.html accessed 20 July 2012 2 See Report of the UN Secretary-General, August 2003
  7. 7. 7 to Responsible Supply Chain Management”,   27   June,   2012.   If a business faces great risks for negative impacts on specific sustainability issues, partnerships can be an efficient way to establish systems to enhance compliance, e.g. by addressing some of the root causes for the challenge, spread costs, improve credibility etc.; as an example the Maritime Anti-Corruption Network (MACN) addresses such compliance challenges in relation to economic sustainability proactively. Establishing partnerships around providing access to remedy for victims of adverse impacts may present another obvious opportunity to engage in a difficult compliance area via partnerships. However, there are no direct expectations for business to engage in partnerships or to improve management of risks through partnerships.  Proactive Contributions to Sustainable Development: CSR also include the dimension that corporations contribute to sustainable development. Corporations may choose to do this in many ways; e.g. through employee and community engagement programs, new product lines, and new market access strategies. It can be argued that donations and sponsorships are not to be considered part of CSR since such endeavours do not affect business practices and, thus, do not lead to sustainable changes for the business enterprise itself. However, it can also be argued, that donations and sponsorships can be used strategically to promote strategic business objectives on CSR. As an example Novo Nordisk in creating the World Diabetes Foundation enhances the CSR objective of contributing to right to health in relation to diabetes care while enabling business objectives. In partnerships donations can be used strategically as an entry point for closer partnerships. No matter how business engage, the challenges in relation to sustainable development are quite massive. In line with the conclusions of the UN, corporations often experience that they need to cooperate with other actors if they seriously and effectively want to address some of these key challenges. Therefore they create or participate in partnerships. As a result, most often partnerships are utilised in proactive approaches. In addition partnerships open for a range of additional advantages, and challenges, which will be explored in this report. International Standards Proactive contributions: Should be based on relevant priorities, aligned with core business activities and business competences. Focus should be on finding competitive advantages, or answering particular high risks. HOW to ensure not to becomie a barrier: The UN Guiding Principles WHAT:TheUNGlobalCompact Compliance: Having a policy and process in place to ensure that you identify, prevent, mitigate and account for adverse impacts on international principles for sustainable development and provide for access to remedy where you do. Partnerships provide an effective way of contributing proactively Responsible Supply Chain Management is how you manage your responsibility in upstream value chain relationships; confer other delivery in Phase II Fig. 1 Illustration of strategic CSR with its two dimensions: compliance and contributions.
  8. 8. 8 Purpose and target group The   Danish   Business   Authority,   The   Danish   Shipowners’   Association   and   its   individual   members   all   recognise the importance of the UN Global Compact to the field of CSR. This inspirational material seeks to inspire the shipping companies to consider enhancing their opportunities for creating or participating in partnerships as a way of implementing CSR in their businesses. It seeks to give practical, yet theoretically well-founded,   information   on   the   do’s   and   don’ts   in   relation   to   different   forms   for   partnerships. The inspirational material was developed by experts in the field of CSR and partnerships with the input from CSR departments as the primary target groups. However, the material can also be used in relation to other personnel groups that would need to consider their role in partnerships while enhancing the CSR efforts of shipping companies; e.g. a CSR or ethics committees, top management or communication departments. Methodology The inspirational material has been developed based on a wish from the members and on interviews with individual   members   of   the   Danish   Shipowners’   Association,   The   Danish   Business   Authority   and   the   experts assigned for the task, Janni Thusgaard Pedersen and Louise Kjaer, based on input from GLOBAL CSR and CSR on Board. The material is based on a collection of best practices as well as on expert knowledge of lessons learned within CSR partnerships over the past 16 years. The work was carried out over a period of eight months in 2012 through a combination of interviews and a   desk   review   of   data   collected   from   members   of   the   Danish   Shipowners’   Association.   In   addition   to   meetings with stakeholders, websites and other material relevant to partnerships of the Danish shipping companies were reviewed. Several meetings were adjourned  by  the  Danish  Shipowners’  Association  and   its members in order to enable understanding of the scope of work. Lessons learned from stakeholder interviews and other inputs are incorporated in the material without specifically referring to single sources. The  experts  extend  their  thanks  to  the  members  of  Danish  Shipowners’  Association  that  participated  in   the work, The Danish Business Authority and all stakeholders participating. How to use the inspirational material The inspirational material on partnerships seeks to answer some of the essential questions in relation to engaging in partnerships. Throughout the inspirational material the content is supported with examples. In addition each chapter is supported by tables outlining core considerations to be taken into account when   engaging   in   partnerships.   The   considerations   are   supported   by   more   easily   accessible   ‘do’s   and   don’ts’,  all  supporting  the  points  made  in  the  chapter.     The  first  chapter  “Why  partnerships”  is  outlining  the  different  opportunities  and gains from partnership. This chapter is divided into benefits to the company, emphasising the direct benefits the company may gain from engaging in partnerships and the joint benefits to partners, outlining some of the indirect benefits, which all partners involved may gain from the partnership.
  9. 9. 9 The  second  chapter  “What  is  a  partnership”  defines  the  terms partnerships and CSR and stipulates the context of partnerships and its role in CSR. The chapter presents considerations on how partnerships can be a means to work strategically and proactive with CSR. The chapter presents various types of partnerships, outlining the variety of possibilities for partnering with different actors. Finally, there is a description of different possibilities for getting involved in partnerships – both emphasising challenges and opportunities related to the different levels of engagement in partnerships. The  third  chapter  “How  to  engage  in  partnerships”  provides  a  cyclical  model  of  a  partnership.  It  describes   the different phases which are required to carry through with a partnership; formation, initiation, implementation and evaluation. It also provides a table with key questions to be raised in the different phases.
  10. 10. 10 What are partnerships and CSR? When working with Corporate Social Responsibility (CSR), companies may benefit from working in partnerships with other businesses or with actors from other sectors. Such partnerships can address both challenges and opportunities in relation to social, environmental and economic sustainability. Partnerships may well serve as CSR initiatives, where they address sustainability issues. By collectively working towards achieving more sustainable business practices, for example through agreements to reduce carbon emissions or to prevent adverse impacts on human rights in the supply chain, business partnerships become a vehicle for CSR. Both from an ethical and economical viewpoint, businesses should only consider engaging in partnership activities that are relevant to core business activities. The Danish shipping industry is by no means an exception and already has experiences of engaging in different partnerships across many areas – both within the industry but also externally with other stakeholders. For example, the industry has engaged in partnerships that aim to ensure sustainable business solutions in the area of environment, e.g. Green ship of the future, Clean Cargo Working Group etc., and is currently involved in a new network fighting corruption – the Maritime Anti-Corruption Network (MACN). Until recently the Danish shipping industry primarily engaged in partnerships and CSR activities concerned with environmental sustainability. With its focus on anti-corruption and thus economic sustainability, the MACN network represents a new area of involvement for the Danish shipping industry in relation to CSR. In comparison the MACN network does not require development of new technologies to the same extent as the case is for partnerships addressing the environment. Moreover the joint leverage of the network is aimed at generating changes of the level playing field within the industry; i.e. changing structures, mentalities and behaviours. The Danish shipping industry demonstrates very well both the variety of challenges which can be addressed through partnerships and the various ways of engaging in partnerships. What is a partnership? Business collaboration between different partners is not a new phenomenon. However, in recent years new partnership models have emerged. The new partnership models are to a greater extent shaped by common interests and values shared by a broad variety of partners. Another characteristic of these new models is a willingness to share risks and opportunities between partners. At the most basic level, a partnership is an opportunity to address common issues by leveraging joint resources and using difference as strength. The most effective partnerships therefore recognise and take advantage of the strengths of each party. To maximise the positive outcome of a partnership, it is important to consider the specific characteristics of different types of partnerships, as well as their potential and limitations. In the following chapter, different models for partnerships will be presented, including perspectives on the challenges and opportunities inherent in each type. Box 1: In partnerships we collaborate to...  pursue common goals,  leverage joint resources, and  capitalise on the strengths of both partners
  11. 11. 11 Definition Partnerships can be defined as: “a  sort  of  collaboration  to  pursue  common  goals,  while  leveraging  joint  resources  and  capitalising  on  the   respective  competences  and  strengths  of  both  partners”3 . This rather broad definition of a partnership captures a variety of partnership constellations. This is important, as partnerships can take many forms and involve many different types of actors. What is corporate social responsibility, CSR? Corporate social responsibility (CSR) is when a company integrates social, environmental and human rights concern into their business operations and core strategy in close collaboration with their stakeholders4 . The Danish Council on CSR defines CSR as follows: “The  company demonstrates corporate social responsibility and creates value for both the business and society by entering into dialogue with its stakeholders to address social, environmental and ethical challenges in accordance with internationally recognised principles” (Guidelines for Sustainable Supply Chain Management, June 2010). Capability   to   adjust   to   and   anticipate   future   regulative   measure   is   also   seen   as   a   part   of   industry’s   ability to work with CSR. Behind this definition is the notion that it creates business value for a company to integrate societal concern in addition to what a short-sighted business calculation immediately shows. Responsible companies  contribute  to  creating  “shared  value”   – as expressed by the economists Michael E. Porter and Mark R. Kramer: ”The   concept   of   shared   value   can   be   defined   as   policies   and   operating   practices   that   enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress”.5 Thus, CSR is more than taking on a voluntary responsibility for negative externalities independent of – or in addition to regulative or economic steering mechanisms. CSR in Danish Shipping companies is about  the  industry’s  ability  to  create  collective  social  value  and  contribute  to  global  development.   Context of partnerships With the launch of the Millennium Development Goals (MDGs)s and the increasing awareness of global warming the development agenda entered into a new ear. Among others the paradigm centres on the acknowledgement of the need to join forces and to share responsibility between public and private actors to address development challenges. The ties between different actors must be strengthened in order to generate good governance, sustainable economic and environmental development, peace and security 3 Jamali & Keshishian, 2008: 279 4 EU Commission: A renewed EU strategy 2011-14 for Corporate Social Responsibility (COM(2011) 681 final) 5 Michael E. Porter and Mark R. Kramer (2011)
  12. 12. 12 and poverty reduction – all factors required to create an enabling environment for people to live a dignified and productive life and for business to blossom. Also, the increasing globalisation of business has generated a growing recognition of the impact of multinational corporations on the local community and the opportunities that lies within joining up forces with such global players. The new scope for business has enabled a more profound understanding of the underlying drivers of sustainable and long- term approaches to business development. In that perspective, the possibility to establish partnership with a variety of actors has both produced new business and development opportunities.
  13. 13. 13 Why engage in a partnership? Multi-sector partnerships are complex. They critically depend on establishing strong working relationships between key individuals/partners often from very different working cultures. Multi-sector partnerships therefore take considerable effort both to establish and to nurture to maturity. The time required to build strong and enduring partnerships can lead to frustration and disappointment. When successful, however, you may obtain also unforeseen advantages. Partnerships in this inspirational material are seen as a way to implement CSR strategies as well as improving impacts from CSR activities. The benefits from partnership engagement are therefore linked to the benefits from engaging in CSR. This material focuses on the benefits for the Danish Shipping Industry. Partnerships have the potential to generate value for both businesses and society. The degree to which the benefits will materialise will depend on the level of engagement and the scope of the activities. The following section highlights individual benefits generated by partnerships; however the benefits are very much interlinked and some may overlap. Being aware of the potential benefits of partnership will create a solid foundation to make strategic decisions when approaching different partnership models. Fig.2 Illustration of benefits of partnerships Benefits to the Company Four potential benefits for corporations engaging in partnerships stand out: Head-off trouble Partnerships offer an opportunity to build relationships with external stakeholders. Such relationships serve several purposes. One important aspect is that partnerships establish alternative communication channels that constitute platforms for dialogue. These channels may serve as radar to identify and overcome obstacles before they materialise into actual problems. In order to ensure this, regular consultations with partners and stakeholder dialogue can prove highly valuable.6 BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Alternative communication channel Build relationships Fig.3 Illustration of benefits to the company and joint benefits 6 Yaziji, 2004 Head-off trouble Foresee shifts in demands Accelerate innovation Enhance corporate image Benefits to Company Pooling of resources Set industry standards Shape legislation Create a shared platform Joint Benifits
  14. 14. 14 Accelerate innovation Partnerships give access to new networks and thereby allow for a more holistic approach to business development. Partnerships may also provide direction to addressing meta-problems by fostering new perspectives and new ways of framing problems and solutions7 . As such the networks create opportunities for establishing channels to reach new markets. Companies can gain knowledge about local markets and innovative processes in order to respond to local and global demands. Partnerships can broaden the strategic lens of the company and support the company in achieving economic success by responding adequately to local social demands. Hence, the core business of the company may be developed to respond to social needs and thereby create shared value. An increased number of corporations see a business opportunity in developing products that respond to the   needs   of   the   people   at   the   base   of   society,   “the   base   of   the   pyramid”   e.g.   addressing   the   world’s   poorest with less than 2 USD a day as a consumer8 . Through partnership collaboration with e.g. local non-profit organisations companies may gain access to crucial knowledge of local consumers and market conditions.  Releasing  the  potential  of  the  “base  of  the  pyramid”  has  become  yet  another  strong  argument   for businesses to engage in partnerships, meeting the needs and demands from this large yet untapped segment of consumers.9 Nokia, ICIC, Datawind, Hindustan Unilever and Artiel are examples of companies who   have   increasingly   considered   the   potential   of   untapped   consumers   at   the   “base   of   the   pyramid”.   Even though this approach to business development seems promising, it might be less relevant to the Danish Shipping Industry as such. None the less the potential of entering into new dynamics and business constellations to respond to challenges in society may inspire the Shipping Industry to an even larger extent to appreciate and explore opportunities for partnering with a variety of actors. One of the main arguments for business to engage in partnerships is lack of in-house expertise on sustainable development and local challenges and the inability to develop these skills and competences in a timely and cost-effective manner. The involvement of partners means unique access to knowledge and resources that can foster a dynamic environment for creating sustainable and efficient solutions. Entering a partnership promotes opportunities for developing new products and services, knowledge sharing, efficiency improvement and knowledge creation, eventually enabling companies to become more innovative and competitive. As a result, partnerships may enhance the flexibility and adaptability of the corporation. 7 Yaziji, 2004 8 Prahalad. Et al, 2005 9 SOS Child Villages, 2011 Box 2: Combating diarrhoea and expanding the soap market in India Through communication campaigns, HLL the Indian supplier to Unilever has created behavioural changes among the base of society, by communicating the clear links between the use of soap and health - one of the most important resources of the poor. Through partnerships with London School of Hygiene and Tropical Medicine, the US Centres for Decease Control and the Environmental Health Project, the World Bank, USAI and local governments, Unilever has been able to increase sales of its low-cost, mass-market soap and proactively contributed to improve the health of the poor (Prahalad2005:2207.241).
  15. 15. 15 The brand value and image which can be created through partnerships can be used strategically to attract and retain talents. Internally partnerships can strengthen   current   employees’   moral   and   motivation thereby increasing employee ownership and loyalty. Partnerships may give the opportunity for the employees to develop at a personal level insofar the partnerships promote active employee engagement in CSR activities. Interpersonal, administrative and technical skills, reflexive skills, social learning, and leadership are some of the potential benefits that employees gain from partnerships. If the Danish Shipping Industry wants to utilise partnerships as a means to develop the skills of employees, companies are advised to engage in partnerships that build on the core objectives for both partners. A partnership that builds on the mission of both partners increases the involvement of employees and therefore also the possibility for learning and development10 . Consequently, partnerships contribute with various dimensions to accelerating innovation and to strengthen competitive ability. Fig.4 Illustration of benefits to the company and joint benefits Foresee shifts in demands Partnerships can create a closer and more direct contact to consumers and costumers as well as bring a closer connection to political decisions that affect a company11 . As such partnerships can allow for a greater understanding of trends as well as a foresight to political risks that can influence a company. 10 SOS Kinderdorpen, 2010 11 Yaziji, 2004 BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Access to new markets Knowledge about local marked and demands Broaden strategic lens Access to specialised expertise Strengthen adaptability Addressing meta-problems Create added value to society Box 4: DONG Energy engages in partnerships with costumers Dong Energy engages in partnerships with its business clients to develop products and services that can minimise CO2 emissions and reduce energy consumption (DONG Energy 2012). Box 3: Optimising WFP processes and operations using TNT core skills “Sharing knowledge is an essential part of TNT's partnership with WFP. TNT sends specialist skilled people to all parts of the world to help WFP build capacity and exchange skills and knowledge. TNT supports WFP with projects which call upon its core skills and expertise in areas like distribution, supply chains, process improvement, customers, engaging employees and environmental issues. In 2009, for example, TNT undertook transport optimisation projects in Mali and Ethiopia. These projects help WFP optimise its transport routes and improve the efficiency of its transport capacity, leading to reduced workloads and substantial cost savings. With these projects, both TNT and WFP people gain knowledge and experience which can be applied back in their day-to-day work.” (TNT 2012)
  16. 16. 16 These benefits inherently improve business competitiveness. From the perspective of the Danish Shipping Industry a partnership may offer an opportunity for the single company to become more adaptable to changes within the industry, both in regards to demands from costumers who e.g. require services which are more CO2 neutral or to comply with and influence legislation on cargo. Fig.5.Illustration of benefits to the company and joint benefits Enhance corporate image There is a high probability that the partnership can create a greater visibility of a company’s  activities   among stakeholders and improve Public Relations (PR), thereby raising brand value. This can be part of a strategic approach to gain more control over the manner in which business is portrayed in the media. The exposure of the partnership can also improve company credibility and trust among consumers and costumers12 , which e.g. can be measured through the Trust barometer13 . But the increased PR exposure may also lead to increased vulnerability of the company. Companies have to carefully balance their communication activities, to avoid any unforeseen risk of being scrutinised by media and consumer scepticism14 . Collaborating with independent and legitimate partners requires establishment of mechanisms of accountability and transparency, which increases the credibility of a business15 . As a result, partnerships may generate trust among stakeholders and customers, since partnerships can function as checks and balances mechanisms, ensuring that businesses not only focus on profit but also act in a socially responsible manner. Furthermore   partnerships’ inherent acceptance by NGOs or multilateral organisations strengthens the legitimacy of the company. In most cases engaging in partnerships will increase the credibility of the company, since a third party   ‘certifies’   the   services,   products   and   the   company.   Such   external   certification can increase customer satisfaction and create trust-based relationships with consumers, which in the end may result in increased loyalty of the consumers. Consequently, companies can gain an advantage over their competitors who do not actively participate in partnerships. 12 Bown et.al. 2010 13 http://trust.edelman.com/about-trust/ 14 Mette Morsing 15 Bown et.al. 2010 BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Direct contact to costumers and political decision makers Establishing a platform for mutual leverage Box 5: Green Ship of the future The objective of this public- private partnership is to join forces to develop technical solutions for cleaner, more energy-efficient and sustainable ship and maritime operations. (Green Ship 2012)
  17. 17. 17 Fig.6 illustration of benefits to the company and joint benefits The table below provides you with some bullets outlining core considerations you need to take into account in order to be successful with your partnership and to gain the listed benefits. Fig.7 illustration of core considerations on benefits to the company As outlined above, there are several benefits to the single company which can be drawn from a partnership.  In  the  table  below,  we  provide  a  small  guide  of  dos  and  don’ts  to  help  you  gain  the  most  of   partnerships in relation to the benefits of the company. Fig.8  Illustration  of  do’s  and  don’ts BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Create visibility Generate trust and credibility Establishment of mechanisms of transparency and accountability CORE CONSIDERATIONS ON BENEFITS TO THE COMPANY  If a problem cannot be solved by one company alone, partnerships may be a necessary means to address the issue  Evaluate how competencies, information, and resources from partnerships can support the core business of the company  Consider how your business can utilise its leverage strategically, while bringing different forms of knowledge and expertise in play  Consider how partnership activities can stimulate individual learning internally and foster motivation and ownership among employees  Consider how partnerships can enhance contact with costumers  Consider which kind of PR exposure a partnership may produce  Consider how different partnerships may strengthen or weaken the brand value of the company  Consider how to establish mechanisms of accountability and transparency with partners  Consider how to share costs and resources BENEFITS TO THE COMPANY – DO’S  AND  DON’TS DO’S  Work with long-term projects, you will not see the results of the partnership overnight  Establish a team of employees across departments DON’TS  Do not think that your partnership will be unnoticed
  18. 18. 18 Joint benefits Even though the focus of  the  material  is  on  the  business  opportunities  of  partnerships’,  business  is  also   dependent on a well-functioning society; thus indirectly the gains of society are also gains to business. Pooling of resources One of the advantages of partnerships is the sharing of costs and resources that would otherwise prevent a company from addressing a societal issue. Sharing of resources allows participants to engage in projects that have a long-term perspective and are more far reaching than activities that the company normally engages in. In the context of the Danish Shipping Industry most partnerships, that embraced long-term targets, have primary been linked to sustainable technology development. In this respect the MACN provides a good example of the necessity of pooling resources in order to overcome societal challenges affecting both society and businesses. In particularly, partnerships are useful when they aim to change cultures, habits, public opinion, attitudes and behaviour. One example of this is the role that the shipping industry can collectively have in changing societal views on corruption. The shipping industry faces a particular challenge in changing the culture around facilitation payments. In order to overcome such challenge a change of culture is needed. The   industry   as   a   whole   has   to   move   stakeholders’   perceptions   away   from   considering   facilitation   payments as an implicit prerequisite in doing business and move towards a joint understanding of facilitation payments as unsustainable damaging and an unacceptable condition for business. In order to change a culture around facilitation payments all stakeholders involved in upholding such culture need to be involved in order to change. When it comes to changing the environment in which the company is doing business, partnerships can provide a strategic resourceful platform to operate from. In the case of the MACN network, partnering with local NGOs, labour unions, Danida and United Nations Development Programme (UNDP) will provide an opportunity to address the challenges of changing behaviours and mind-sets in a holistic manner. Whereas the NGOs and labour unions may create awareness and behavioural changes within civil society and among employees, UNDP and Danida could push for changes at a political level. Creating changes at both levels is crucial, if you want to create sustainable solutions to the problems surrounding corruption. Box 6: Joining forces within the industry Some of the gains from the Maritime Network on Anti-Corruption (MACN) network are;  To collaborate to address and solve specific challenges  To share best practices among members and align policies and approaches in the field of anti-corruption.  To share resources and create leverage to solve industry challenges. Corruption and in particular facilitation payments are barriers faced by the whole industry which prevents operating in a sustainable and responsible manner. Therefore this partnership presents a value proposition for the industry as a whole and for society.
  19. 19. 19 One of the ambitions of the MACN network is to seek support from government bodies and international organisations to target corrupt practices in challenging jurisdictions and encourage solutions to root causes for the same. Fig.9 Illustration of benefits to the company and joint benefits Set industry standards Partnerships give society increased access to commercial opportunities which may otherwise be restricted. Partnerships therefore become a crucial platform that companies can operate from when aiming to gain influence and leverage in the development of business standards. The business standards that partnerships can influence may be linked to the quality of products or equalising the general conditions for business operations; in particular those that enforce sustainable behaviour. The leverage to develop standards may be created by pulling together the industry in order to reach agreements on license to operate, but many also focus on stakeholder engagement e.g. engagement of civil society, public or multilateral organisations. These may serve as neutral participants, assuring fair and sustainable solutions for all companies in the industry and for society. Furthermore setting industry standards is also about achieving first mover advantages. For instance Novo Nordisk worked with “Dyrenes   Beskyttelse”   (the   largest   Danish   animal   protection   NGO)   to   improve   the   living   conditions   of   animals used during pharmaceutical trials. The standards developed, and incorporated by Novo Nordisk, were later mandated by the EU leaving Novo Nordisk with first mover advantages16 . BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Influence on business standards Create license to operate Fig.10 Illustration of benefits to the company and joint benefits 16 http://www.novonordisk.com/images/science/Bioethics/Downloads/Bioethics_Animals%20DK_25-09.pdf BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Able to address issues, which you could not solve on your own Sharing costs and resources enabling engagement in long-term projects Box 7: Sustainable Shipping Initiative (SSI) The Sustainable Shipping Initiative (SSI) brings together leading companies from around the world, NGOs Forum for the Future and WWF to plan how the Shipping Industry can contribute to - and thrive in - a sustainable future. The SSI is designed to help the Shipping industry to make long-term plans for future success. (Forum for the Future 2012)
  20. 20. 20 Shape legislation Partnerships also offer an extraordinary opportunity to create leverage to address gaps in legislations and governance17 . Partnering with business may therefore be a reasonable approach for governments, in order to both attract business and to create sustainable solutions. This is especially the case when a variety of stakeholders are in partnerships, so-called Multi-Stakeholder Initiatives (MSIs). They create an opportunity to establish solid and far reaching solutions to complex and over-arching societal problems. Businesses benefit from participating in shaping legislation ensuring pragmatic solutions for business. Once legislation is in place all companies are required to follow the same rules. This reduces the risk of free-riders;;  i.e.  companies  that  do  nothing,  but  benefit  from  peers’  actions.  The  Danish  Shipping  Industry   may consider the potential benefits of partnering with the EU commission in programs under the implementation of EU CSR strategies in order to influence both strategies and legislations. The International Maritime Organization (IMO) or the International Labour Organization (ILO) could be other possible partners if striving to influence global technical and environmental regulations for shipping. The authoritative reference point of the UNGPs may serve as a strategic advantage for the Danish Shipping Industry, since the Danish Shipping Industry is one step ahead when it comes to e.g. environmental friendly modes of transport, health and security etc. In the long run aligning expectations to the shipping industry globally can create a level playing field. BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Influence legislation Reduce risk of free-riders Fig.11 Illustrations of benefits to the company and joint benefits Create a shared platform Partnerships generate an opportunity to establish communication platforms that serve as a means of consultation between affected stakeholders and allow for the inclusion of various perspectives. A company that engages in such a platform will have the opportunity to be on the forefront of critical issues. From a societal perspective, the communication platform offered from partnerships can also be used by non-private sector actors to pressure companies to address their social responsibilities and bring to the fore issues that companies may be unaware of. The communication platform offered from partnerships can help minimise the expectations gaps between stakeholders and thereby assist in creating realistic outcomes from the onset of a partnership. Fig.12 Illustration of benefits to the company and joint benefits 17 Yaziji, 2004 BENEFITS TO THE COMPANY PARTNERSHIP BENEFITS Be on the forefront of critical issues Minimise expectation gaps and create realistic outcomes
  21. 21. 21 CORE CONSIDERATIONS ON JOINT BENEFITS  By sharing costs and resources, consider how your businesses can contribute to addressing complex societal issues  Consider how to establish dialogue encouraging different forms of knowledge to flourish  Consider how your businesses can contribute to influence the development of industry standards through partnerships  Consider how your businesses can use joint leverage of a partnership to address gaps in legislation or other governance issues.  Consider how partnerships involving with a variety of stakeholders can serve as a communication platform and as a means of consultation between different stakeholders and thereby minimise expectation gaps Fig.13 Illustration of core considerations on joint benefits JOINT BENEFITS – DO’S  AND  DON’TS DO’S  Establish mechanisms and communication channels  Engage regularly in stakeholder dialogue, especially when critics emerge  Identify gaps in legislations  Identify stakeholders working for the same cause DON’TS  Don’t  expect  to  get  immediate  results Fig.  14  Illustrations  of  do’s  and  don’ts Reasons for Partners to engage in Partnerships Partnerships give the partner an opportunity to establish direct relationships with companies, which normally may be difficult to get in contact with. As a result, partnerships may be a means to gain access to resources and influence. Since partnerships provide an opportunity to build a relationship with a given company, there is a greater chance to engage in constructive and transparent discussions with the company. Hence partnerships offer a leeway to establishing dynamic interaction and better access to information flows and expertise. The partnership may offer the possibility to capitalize on the respective competences and strength of both partners. Especially partnerships with international corporations can result in access to a wide range of different stakeholders for example employees and consumers, which might be of particular interest to the partner.
  22. 22. 22 Potential challenges in partnerships Although partnerships can create value for a company and entail many positive outcomes, there are also potential challenges related to engaging in partnerships –for private companies as well as for their partners. Both the company and the potential partner need to be willing to invest some extra efforts into building a common language around the partnerships, establish communication channels and work flows, suiting all partners involved in the partnership. Otherwise bottlenecks of communication and misunderstandings may compromise the partnership. Partnerships are resource demanding and require a long time horizon. Therefore, tracking concrete results of partnership activities will only be possible after a certain amount of time. If conditions are not made clear from the very beginning, it may discourage the teams working on the partnership activities. This could lead to lack of ownership compromising the consolidation of the partnership within the organisation. In order to avoid that, it is central to develop key performance indicators. Another aspect to stress is the issue around image. Engaging in partnerships requires willingness to compromise and to reach consensus. Consequently, all parties involved need to consider potential negative consequences of accepting eventual compromises. Since work methods, organisational cultures and values may differ, it can be a challenge to reach consensus and set priorities and goals for the partnership. As a result, it can be a challenging assignment to develop suitable governance structures for collaboration. An NGO can for example loose legitimacy if it engages in partnerships with too many companies or if it has to compromise some of its core values in order to reach consensus with the partners. Also, partnerships involve a risk of loss of reputation, where partners experience scandals. Other challenges related to partnerships relates to overcoming mistrust and fear of losing control. If such issues are not addressed early on in the process, they might become a barrier for developing a fruitful partnership. Since a partnership requires a certain amount of openness from the partners, another risk related to partnerships is confidentiality. Engaging in partnerships therefore requires that certain agreements and mechanism are in place to ensure confidentiality. Seen from a business perspective, some of the main barriers for entering a partnership are; lack of knowledge about potential partners, lack of relevance to the company and lack of resources18 . Some of the main barriers for NGOs to start business partnerships are, similarly, lack of knowledge of partners, lack of clarity how partnerships link to their strategies, lack of resources, lack of acknowledgement of partnerships, and lack of skills19 18 Hockerts, 2010 19 ibid
  23. 23. 23 Public-Private partnerships Nonprofit-Private partnerships Business to Business partnerships Multilateral-Private partnerships Types of partnerships Who to partner with? Partnerships can be structured and carried out in a number of ways. The choice of a specific partnership model will depend on a number of considerations. Regardless of which partners you engage with and which level of engagement you may choose, a partnership will inherently cause challenges for those involved. But such challenges can often be outweighed by the potential business opportunities. Partnerships can include a broad range of actors. A shipping company might consider partnering with industry partners to address common challenges such as; piracy, responsible supply chain management and compliance with the UN Guiding Principles on Business and Human Rights. Or it might consider engaging in cross-sector collaborations that draw on the capacity and resources of different societal sectors. Cross-sector partnerships could focus on several areas linked to the core business of the shipping industry, such as; trade of arms - violating the right to life, liberty and security, restrictions on freedom of movement or broadening the current engagement in activities linked to economic sustainability by looking at taxes. There are many potential forms of partnerships for companies working in the shipping industry. A company might engage in a partnership with public institutions, non-profit actors, multilateral institutions, or with other business enterprises. Partnerships may also include actors from more than two sectors, such as tripartite partnerships. The partnership between The Danish Shipowners’   Association   and public authorities is an example of a public- private partnership, focused on air emissions and ballast water. The consultancy within Engineering, Environmental Science and Economics, COWI, provides another example of how it can be meaningful to involve different types of actors in a partnership. COWI builds a bridge  in  Mozambique  in  a  partnership  with  the  `national  roads  and  infrastructure’  ministry.  As   part of the contract COWI is engaging in preventative work on AIDS which they do through a local NGO called Verde Azul (NGO)20 . Finally, business to business partnerships can be exemplified through the Global Business Initiative on Human Rights, which is a business-led initiative working towards advancing human rights in a business context around the world21 . 20 http://www.cowi.dk/menu/tema/temaarkiv/mozambiqueensucceshistorieiafrika/afrikanskbrobyggerimedaidsforeb yggelse/Pages/afrikanskbrobyggerimedaidsforebyggelse.aspx 21 http://www.global-business-initiative.org Box 8  Types of partnerships refers to the constellation of stakeholders, sector involvement  Partnership Model refers to the construction of the partnership as a whole – including considerations on which stakeholders to involve and the level of engagement in the partnership by the different partners. Fig.15 Illustration of different types of partnerships
  24. 24. 24 When forming a partnership, it is crucial to consider how different stakeholders could contribute to the collaboration. It is necessary to consider how the objectives of the partnership will be reached, by what means and through which resources, capabilities and competences. Specifically how do the different partners complement each other, and what is the most fruitful constellation of partners? The figure below highlights some of the potential (social/development) contributions the various types of partners may contribute with22 . Fig.16 Illustration of the different actors to partner with As outlined in the figure, the contributions of the different sectors differ. In order to gain the most out of a partnership, being aware of these differences and identifying potential synergies is of great value. Another important factor to consider when engaging in partnerships is the type of resources that are needed in order to reach the objectives of your CSR activities. Different partners contribute with different resources. The figure below outlines some of the resources offered by the different partners. 22 Warner & Sullivan, 2004 TYPES OF PARTNERSHIPS CONTRIBUTIONS Public sector: International agencies; national, regional and local government; public sector services; donor agencies; academic and educational institutions • Foundation of justice through law and regulations • Physical infrastructure • Social infrastructure and safety • Education • Public finance budget Business sector: International and national companies, associations, networks, financial institutions, enterprise development agencies. • Foundation of economic growth by employment generation • Tax revenue • Trade • Investment • Provision of goods and services etc. Non-profit sector: Community-based organisations, non- governmental organisations, not-for- profit organisations, private voluntary organisations, interest-based representations • Base for liberty, responsibility and personal expression • Social cohesion • Legitimisation • Training
  25. 25. 25 RESOURCES TYPES OF PARTNERS/SECTORS Public sector Business sector Non-profit sector Human resource Seconded personnel; i.e. personnel that temporarily work for a different organisation Seconded personnel Employee volunteers Volunteers Relations Policy makers Business network Marketing opportunities Suppliers Community relations Media opportunity Relations to Non-profit sector Expertise Technical Project development Education Technical Project development Training Management Monitoring Project development Training Facilitation Information Facts, knowledge & Statistics Legal background Market analysis Forecasting Local Knowledge Social sensitisation Logistics Access Offices and venues for activity Transport Equipment Offices and venues for activity Transport Equipment Products Access Offices and venues for activity Fig. 17 Examples of the resources different actors can contribute in a partnership – source Louise Kjær Keeping potential contributions and resources in mind, the following sections will describe the different types of partnerships which involves various stakeholders, emphasising their challenges and their opportunities. CORE CONSIDERATIONS ON TYPES OF PARTNERSHIPS  Consider your motivations as well as advantages of attracting a certain partner  Consider how your business and can complement a potential partner; take advantage of each other’s  strengths  and  minimise  weaknesses  Consider if you are willing to share resources, knowledge and skills across different business sectors or other business partners Fig.18 Illustration of the core consideration on types of partnerships
  26. 26. 26 Fig.19  Illustration  of  do’s  and  don’ts  in  regard  to  types  of  partnerships Public-Private Partnerships Partnerships between private companies and public bodies – whether they be national governments, local councils or other authorities – are termed Public-Private Partnerships (PPPs)23 . The term can be used to describe a variety of arrangements between the public and private sector, involving different combinations of public or private sector finance and risk exposure. The overarching objective of PPPs is to address societal challenges that can best be addressed by combining resources from the public and private sector. The expectation is that this will help public bodies solve problems that are difficult to single- handedly address, while partnering private companies can gain long-term benefits – such as continuous contractual agreements or revenue subsidies – for engaging in the partnership. A successful PPP transforms a public project into an attractive investment for a private sector partner. Hence, PPPs should ideally generate value and meet the objectives for both parties involved. As such, PPPs are more than one-off transactions and need to be based on the right policies, institutions, and processes to be successful. Long-term contracts can foster strong mutual interest between parties and entail large financial benefits as well as generate societal value for both public and private partners. While public bodies can bring capacities such as a regulatory framework, strategic coordination, and a public finance budget to a project, private companies can contribute with technical skills, human resources and 23 Farquharson, E. et al. 2011 TYPES OF PARTNERSHIPS – DO’S  AND  DON’TS DO’S  Be open-minded  Take the time to find the right partner with the right competencies  Ensure there is buy-in to the partnership at different levels of the partner organisation  Engage in trust-building activities early in the process  Ensure mutual confidentiality  Agree on concrete governance structures for the partnership  Develop a framework for measuring outcome based results  Establish centralised points of contact and dedicate personnel to the partnership  Establish adherence to a common agenda to ensure long-term alignment to shared objectives DON’TS  Do not engage in partnerships, if your business is not willing to change  Do not consider difference to be a barrier. Utilise it as a catalyst for change  Do not build a partnership on prejudice  Do not expect immediate results; partnerships involve a steep learning curve  Do not hesitate to get involved Box  9:  Focus  areas  of  PPP’s PPPs often focus on infrastructure development and delivering public services that have important social implications, such as water and electricity.
  27. 27. 27 additional funds to successfully deliver the service to the general public. If interests are aligned from the beginning and expectations for the collaboration are clear, the chances for a successful partnership will increase. PPPs are attractive to the public sector due to the benefits of mobilising private capital, which can help speed up the delivery of public services. Other overall benefits include greater efficiency in the use of resources, good quality assurance and risk aversion. The incentives for private businesses lie in the chance to boost their CSR profile whilst securing large contracts. A PPP may also be a means to gain long- term contractual agreements with the public sector, which can ensure future business. Engaging in a PPP will require willingness of the private company to align their business activities with a rather long-term project timeframe and the willingness to corporate with bureaucracy. As such, the described type of partnership would be defined as a public investment partnership, where the private company delivers the service required. Another PPP worth considering by any business forming part of the Danish Shipping Industry would be `Danida’s   Business   Partnership´.   This   PPP   has   a   very   different   vision   of   strengthening   sustainable   development in an international donor-context. Any business forming part of the Danish Shipping Industry  should  consider  taking  a  closer  look  at  Danida’s  Business  Partnerships  initiative.  Engaging  in  a   partnership with Danida may be slightly different in nature from a traditional PPP, since this partnership would require engagement in activities in developing countries, but may nonetheless pose an interesting business opportunity. The challenges of operating in a development country in an international donor context may be a concern for the company. At the same time, this partnership may be of particular relevance in relation to areas such as piracy, anti-corruption, restrictions on freedom of movement and trade of arms. One of the challenges faced by the Danish and the European Shipping Industries is the growing competitiveness   from   the   world’s   emerging economies. A growing number of shipping centres in emerging markets strives to attract global shipping companies and employees by offering attractive economic conditions. While favourable economic conditions remain important, talents are attracted and Box 10: DANIDA business partnerships  Danida Business Partnerships serve to lower the risk for businesses of entering new partnerships.  It partly covers relevant expenses related to the transfer of knowledge and skills.  The initiative covers up to 50-75 pct. of costs of activities  The initiative supports activities such as partner identification, partner visits, market analysis, risk analysis, due diligence, development of business plans, testing of business models, and outlining of indicators. (UM 2012) Box 11: DANIDA business partnerships with Toms – Developing new technologies Through a partnership, between DANIDA, the Ghanaian Research institute, Cocoa Research Institute of Ghana (CRIG) and Toms, the partners have been able to develop improved methods of fermentation of coca beans. The new methods save time and workflows, minimise negative influence on the environment and secure a higher quality of coca beans. (Toms 2012)
  28. 28. 28 employees retained through thorough CSR approaches. The UNGPs now form a basic expectation under CSR. Consequently, the UNGPs can serve as a strategic means by which the Danish and European shipping industries to compete with these emerging economies. Sector partnerships collaborating on the implementation of the UNGPs in the shipping industry may be a means to work towards a level playing field for the shipping industry when it comes to addressing adverse impacts on human rights and possibly the environmental and economic bottom lines as well. Private - Nonprofit-Partnerships Partnerships between private companies and non-profit organisations are referred to as Private-Non- Profit Partnerships (PNPs)24 . Such partnerships can be driven by both economic- and non-economic goals. To be considered a partnership, the activities between the private sector and the non-profit sector should be based upon the sharing of resources, knowledge and skills between a company and a non-profit partner. A financial donation would not in itself be considered as a partnership. Nonetheless starting out with a donation also called a philanthropic activity (cf. transactional) may be a potential entry point for the partnership, allowing the partners to get familiar with each other and to establish trust and goodwill before engaging in a more integrated partnership with higher entry barriers. PNPs partners often face the challenge of having to balance very different sets of values, beliefs and modes of operation. Such differences present a barrier which must be overcome at an early point in a partnership. It is therefore of great importance to initially align interests and objectives and ensure that all partners share the same partnership vision. For businesses, some of the possible benefits of partnering with Non-Profit Organisations (NPOs) include heading off trouble, accelerating innovation, gaining legitimacy, foreseeing emerging market trends, gaining influence on legislation and establishing new industry standards. Often NPOs are the preferred partner when trying to enter new markets, especially in economic developing countries. Often such NPOs have the needed knowledge of the local market. In general NPOs specialised knowledge of social and environmental issues add value when trying to address complex issues such as child labour, corruption, illegal foresting etc. This specialised knowledge of social and environmental issues is tightly connected to establishing legitimacy. Complex issues most often cannot be addressed in isolation. They require collaboration with local partners who are regarded as credible and legitimate representatives. For NPOs PNPs entail benefits in the form of increased financial or technical support for projects and causes. Moreover, PNPs will increase the impact of NPOs on corporate behaviour and may eventually influence industry standards. As such, PNPs entail large potential benefits to both parties25 . 24 Kolk, A. et al. 2008 25 Yaziji, 2004 Box 12: Focus areas of PNPs PNPs can have many different areas of focus, including initiatives for environmental, economic and to a large extent social sustainability, such as health, labor rights, equity and education.
  29. 29. 29 Business to Business- Partnerships Business to Business-Partnerships (B2B)26 , cover strategic alliances between different corporate entities. Through the pooling of resources and skills, partners can work together to achieve common goals, as well as goals specific to the individual partners27 . The MACN provides a good example of a B2B-Partnership, since solving the problems around facilitation payments requires a joint effort within the sector. B2B- Partnerships could also be desirable, if your CSR activity requires you to collaborate with other sectors than your own. There are many motives underlying the decision to engage in B2B- Partnerships, including the opportunity to gain access to new markets, sharing marketing- or manufacturing costs, and enhancing skills. Such partnerships can be between businesses within the same industry, as well as with other industries. B2B- Partnerships may also turn into a network of partners forming strategic alliances around a common topic of interest, whereby common industry standards can be developed while members are enabled to collectively tackle pressing issues. Most B2B-Partnerships are established through contracts and relate primarily to commercial interests of the parties. This material relates to B2B-Partnerships that specifically seek to address challenges or reap benefits in relation to sustainable social, environmental, and economic development. Under all circumstances B2B-Partnerships need to be extra careful if the partnership is established between businesses from the same sector. Anti-competition or anti-trust laws are well developed in most jurisdictions and place a heightened burden of proof on businesses that they are not fixing prices or establishing illegal cartels, when meeting. This concern needs to be attended to when establishing projects, possibly in collaboration with the anti-trust authorities.´´ Global Public-Private Partnerships The term Global Public-Private Partnerships (GPPPs) is used to indicate transnational, collaborative relationships between private companies and intergovernmental organisations – such as UN agencies, development banks or EU institutions28 . GPPPs cover a relatively new form of governance and seek to move away from hierarchical relationships to more horizontal and participatory arrangements between organisations, companies, research entities and others. 26 Varadarajan & Cunningham, 1995 27 ibid 28 Buse, K. and Walt, G. 2000 Box 13: A Network Example Maritime Anti-Corruption Network (MACN) is a good example of an industry network where resources and experiences are shared in order to increase leverage and address a common problem in the shipping industry; namely business ethics. Box 14: UN as a potential partner in MACN  During the past two decades, collaboration between different UN bodies and business leaders has resulted in progress within anti- corruption (Global Compact Office, 2011)  Drawing on its vast experiences, the UN could be a strong partner for the Danish shipping industry in the work on corruption
  30. 30. 30 GPPPs can be characterised as governance mechanisms, which are established by a number of different partners, ranging from multi- and bilateral agencies to NGOs, private businesses and foundations. It is an alliance made to achieve a common practical objective through the pooling of competencies, while sharing risks, responsibilities, costs and resources. One of the incentives for the corporate sector to engage in GPPPs may be the prospective for individual businesses to improve their corporate image29 . Another may be the ability to influence international legal standards30 . Engaging in this type of partnerships also enables the incorporation of broader scopes in CSR activities. E.g. establishing partnership projects with the EU or UN enable implementation of bigger scope than when working with e.g. NPOs. One of the most commonly faced challenges in GPPPs is to overcome differences in organisational cultures. Multilateral organisations, such as the UN, often have a much longer time horizon than that of corporate entities. Therefore, it is crucial that expectations are aligned and a clear plan for the partnership is made from the beginning. In addition bureaucracy structures around multilateral institutions are often perceived as a barrier in itself. Receiving an approval for a partnership may last many months and often corporations operate on very tight deadlines. However, the establishment of the UN Global Compact has enabled more smooth collaboration between business and the UN, and in general UN Agencies are becoming more 29 Utting & Zammit, 2009, Buse & Walt, 2000 30 ibid Box 16: Partnerships with the United Nations During the last couple of years the UN increasingly engages in partnerships with the private sector. The UN explicitly encourages public- and multilateral entities to engage in partnerships, as partnerships are perceived as essential to reach the Millennium Development Goals. Box 17: The Clean Cargo Working Group - Developing standards for clean cargo “The  Clean  Cargo  Working  Group  is  a  global  business-to-business initiative consisting of leading cargo carriers and their customers. The objective of the working group is to improve environmental performance in marine container transport through measurement, evaluation, and reporting. In collaboration the members of the working group develop the practical tools for measuring, evaluating, and reporting the environmental impacts of global goods transportation. (The Clean Cargo Working Group 2012) Box 15: UN as a potential partner in MACN  During the past two decades, collaboration between different UN bodies and business leaders has resulted in progress within anti-corruption (Global Compact Office, 2011)  Drawing on its vast experiences, the UN could be a strong partner for the Danish shipping industry in the work on corruption
  31. 31. 31 accustomed to participating in partnerships with the private sector and thus establish fix procedures and integrity measures, shortening the processes. Fig.20 Illustrations of core considerations on types of partnerships Level of engagement When companies engage in partnerships, they have to consider their level of engagement. This decision will depend on the goals, ambitions and available resources in the company. The level of engagement can be viewed as a collaborative continuum. This continuum ranges from an arm’s  length31 relationship between the partners, in which the company plays a rather invisible role in the actual implementation phase, to an intensive alliance where both partners take leadership of the implementation.  Arm’s  length  relationships  are  characterised  by  exchange  of  resources,  while  intensive   alliances are characterised by pooling of resources. It is important to consider the level of engagement prior to engaging in a partnership. Different levels of engagement entail different challenges and opportunities. These must be weighed against each other. Partnerships can range from one-way information sharing, through two-way dialogue and collaboration. The presented definitions of the different partnership models should be understood as a continuum. A company’s  engagement  in  a  partnership  can  therefore  be  seen  as  a  gradual  process.´ Fig. 21 Illustration of the level of engagement in partnerships 31 Rondinelli & London, 2003 CORE CONSIDERATIONS ON TYPES OF PARTNERSHIPS  Consider how your business and a potential partner can complement each other; take advantage  of  each  other’s  strengths  and  minimise  weaknesses  Consider self-interests as well as advantages of attracting a certain partner Transactional Partnership • Philantropy • Arm's Length Relation • Passive Transitional Partnership • Reciprocal Exchange • Interactive Collaboration • Participative Transformative Partnership • Symbiotic Value • Intensive Alliance • Leadership
  32. 32. 32 Fig.22 Illustration of the characteristics of the different levels of engagement The figures emphasise that the level of engagement is closely linked to objectives, activities and benefits of the different partnership models. Transactional Engagement – providing sponsorships or charity The reason for engaging in transactional activities32 is normally grounded in the idea of giving back to the community, e.g. through philanthropic contributions. A transactional engagement is a discrete effort, typically providing donations of time, financial resources or skills. In other words, transactional activities typically consist of transfers of resources from the corporation into operational activities of another entity. This level of engagement can be considered as a sponsorship or as charity rather than a partnership, since the company may support the realisation of different projects. Most communication is one-way communication from a company to a partner e.g. in terms of information sessions. These activities will only occur occasionally and the corporate partner has a high level of control over the process. On the other hand, the receiving partner has full responsibility for implementation activities. As such, a transactional level of engagement is not based on a long term approach. This makes engagement easy and leaves a great level of flexibility. The engagement can be used as a means to improve brand value, increase employee morale and enhance legitimacy. 32 Brown et. Al., 2010 Transactional Transitional Transformative Aligned to core business Not aligned with the core business Closely aligned with the existing core business Enlarging the core business or development of new business The objective Extra activities Improving environmental or social performance of existing business operations New products and services Expected benefit Improvement of image and reputational impacts Improvement of environmental and social aspects of core business Alleviation of social, environmental or economic problems Transactional Partnership • Philantropy • Arm's Length Relation • Passive Transitional Partnership • Reciprocal Exchange • Interactive Collaboration • Participative Transformative Partnership • Symbiotic Value • Intensive Alliance • Leadership
  33. 33. 33 In itself the transactional engagement is not considered as a CSR partnership; firstly because the corporate partner is not willing to share risks and opportunities33 , secondly, because the supported activities are addressing sustainability issues without direct involvement of business interests. In other words, activities linked to transactional engagement typically takes place outside the corporations own core business. There are no direct change to core business operations, which would improve sustainability of the business and no long-term strategic business benefits created through this engagement. A partnership would take the interests of all partners into account. Although, the transactional engagement may serve as a starting point for establishing contact across sector boundaries, these are still preliminary steps in forming a genuine partnership. Despite the simplicity of transactional engagement, important challenges may arise from this approach. The short-term horizon risks are addressing problems only at the surface without considering root causes; i.e. the intervention risks not being sustainable. Arbitrary community engagement and donation activities are, by many CSR practitioners, considered insufficient in addressing CSR. The challenges of changing the business model to continuously contribute to, while not becoming a barrier for, sustainable social, environmental and economic sustainability is not addressed by such activities. CORE CONSIDERATIONS ON TRANSACTIONAL LEVEL OF ENGAGEMENT  Consider how activities can be linked to your core business  Consider how the transactional level of engagement can become a starting point for engaging in collaborative partnerships  Consider the strategic value of supporting different stakeholders  Consider if you want to join a consortium or if you want to establish a direct relation to a stakeholder Fig.23 Illustration of core considerations on transactional level of engagement 33 Kjær, 2003 TRANACTIONAL LEVEL OF ENGAGEMENT- DO’S  AND  DON’TS DO’S  Establish clearly outlined donation processes  Engage in transactional engagement if you wish to have a high level of control over the process without active participation  Engage in transactional engagement if your objective is to improve brand value and employee morale as well as to enhance legitimacy of the business – but with little responsibility and risk involved Box 18: Example of transactional engagement After the tsunami 2004 Citigroup provided office space in Bangkok for the UN operations coordination. The French food corporation Danone donated packages of high-protein biscuits, water and milk drinks through its local distributors  and  through  UN’s  World  Food   programme (Harvard Business review, 2006).
  34. 34. 34 Transactional Partnership • Philantropy • Arm's Length Relation • Passive Transitional Partnership • Reciprocal Exchange • Interactive Collaboration • Participative Transformative Partnership • Symbiotic Value • Intensive Alliance • Leadership Fig.24  Illustrations  on  do’s  and  don’ts  in  regard  to  transactional  level  of  engagement Transitional partnerships – integration of CSR activities into core business A transitional level of engagement is driven by the idea of building bridges between different partners34 . Contrary to the transactional engagement transitional partnerships aim at integrating responsibility and sustainability aspects into the core business. The focus of these partnerships is on carrying out existing business operations more responsibly and sustainably35 . The emphasis in such partnerships may evolve around ensuring high product quality, Responsible Supply Chain Management (RSCM) – e.g. preventing child labour, health and safety at the workplace, diversity etc. A good example on transitional partnerships within the Danish Shipping Industry is the development of a shared toolkit for RSCM based on the UNGPs by five Danish shipping companies as part  of  the  project  “On  Course  for  a  Better  World.  Another   example is the establishment of a working group aiming to develop a common Code of Conduct on RCSM for the relations on dry-docks. Consequently, CSR considerations are incorporated into the operations of the corporation both internally and externally in its relations. This level of engagement requires corporations to be more involved in the process than in transactional engagement. Transitional engagement can lead to joint learning and increase understanding between partners. Typically, these partnerships draw on partner dialogues and consultations to facilitate joint learning. Transitional partnerships revolve around stakeholder dialogues where public, private and third parties discuss and develop e.g. private sector regulations36 . An output could be to develop common guidelines 34 Brown et.al 2010 35 Kourula & Halme, 2008 36 Kourula & Halme, 2008 DON’TS  Do not expect to generate new business solutions  Do not expect to get involved in long term projects Box 19: UN Global Compact – A transitional Partnership  The UN Global Compact aims at mainstreaming the principles in business activities around the world in order for companies to act responsible.  A multi-stakeholder forum of governance and corporation.  The partnership builds on dialogue and best practices.
  35. 35. 35 for environmental and social issues. Focus is on improving social, environmental and economic sustainability aspects of the core business. As a result, engagement in transitional partnerships will require repeated interaction and accordingly, the responsibility of controlling the partnership is more equally shared between partners. The transitional partnership is worth considering if the aim is to improve legitimacy, improve risk management and attract talent. TRANSITIONAL LEVEL OF ENGAGEMENT – CORE CONSIDERATIONS  Consider how to make use of joint learning and understanding  Consider how to involve stakeholders Fig.25 Illustration of core considerations on transitional level of engagement Fig.26  Illustration  of  do’s  and  don’ts  in  regard  to  transitional  level  of engagement Transformative partnerships – generation of innovative solutions Contrary to the transitional and transactional levels of engagement, the driver of transformative to develop new business models to alleviate societal, environmental and economic issues37 or enhance sustainability in these areas. 37 Kourula & Halme, 2008 TRANSITIONAL LEVEL OF ENGAGEMENT – DO’S  AND  DON’TS DO’S  Engage if the objective is to improve legitimacy, manage risks and attract talents  Engage if you aim to improve social or environmental issues based on existing business operations DON’TS  Do not engage if you wish minimal involvement  Do not engage if you are not willing to engage in stakeholder dialogues and consultations Transactional Partnership • Philantropy • Arm's Length Relation • Passive Transitional Partnership • Reciprocal Exchange • Interactive Collaboration • Participative Transformative Partnership • Symbiotic Value • Intensive Alliance • Leadership
  36. 36. 36 Does the partnership engage a team of appropriate stakeholders? ? Does the partnership include capacity to reach scale and lasting impacts? Thus, the objective of the partnership is to create win-win solutions for society and business. Hence, transformative partnerships possess a large potential for value creation, as they can generate new solutions and efforts that are hard to duplicate. In this way, the transformative approach can give partners competitive advantages that cannot be achieved through transactional or transitional levels of engagement. Here focus is on using CSR as a vehicle for innovation through partnerships, e.g. to develop new products or services that aim to address a social and/or environmental problem. This kind of engagement is distinct from transactional partnerships, since it provides the opportunity to achieve outcomes that are unattainable without the engagement of all partners. The focus on innovation requires a high level of involvement and frequent interaction between partners. Often partnerships build on a transformative level of engagement seek to restructure ´the rules of the game´ for companies and for the markets in which they operate, e.g. by developing new business models or through a wish to change society38 . The process is driven by co-ownership and established through trust-based relationships and mutual understanding. Communication is characterised by two-way flows, and all partners are in control of the partnership process. This approach is also characterised by the willingness of all parties to share risks as well as skills, knowledge and resources. The synergies created through the partnership thus become drivers of change. With multiple partners engaging in transformative partnerships, decision-making processes and management structures can become very complicated. Transformative partnerships therefore require solid organisational efforts and are most likely to be successful when only a few partners are involved. Transformative partnerships also appear to have greater potential for long-term positive business outcomes than transactional partnerships. Further, in relation to social outcomes, the transformative partnership appears to have a higher potential for generating local income-generating mechanisms and supporting local self-sufficiency39 . In order for individual companies to increase the value of their business activities, it can be beneficial to move in the direction of a transformative approach to partnerships and engage with partners outside their industry. Such re-organisation may create new working groups, which in turn could improve operations or trigger product development. For some companies it may be easier to start partnership engagement at the transactional or the transitional level and gradually move towards a transformative level. 38 Brown, et.al., 2010 39 Kourula & Halme, 2008
  37. 37. 37 Box 20: Clean Cook Stoves – a transformative partnership  The objective of the partnership: Poverty reduction and improved health from increased access to clean energy and reduction of harmful indoor air pollution  Systematic issue addressed: Respiratory diseases and high energy costs in household – resulting from the use of polluting, inefficient cooking practices  Necessary stakeholders involved: The UN Foundation, the World Health Organization, Shell, the Shell Foundation, Morgan Stanley, Impact Carbon and other governments, implementing organizations and donors necessary for the partnership.  Core Competences leveraged: The UN Foundation used its convening and brokering capacity to convene partners and raise funds for the effort. Shell is using its knowledge of energy markets assess the demand for clean cook stoves in several developing countries. Morgan Stanley and Impact Carbon are exploring ways to subsidize the cost of cook stoves through carbon credits generated by the reduction in pollution that results from their use (UN Global Compact Lead, 2011:15).  Capacity for scale and lasting impacts: Through a combination of information sharing, consumer marketing, and financing mechanisms for affordability, the Alliance aims to create a self-sustaining market for 1000 million clean cook stoves worldwide. UN Global Compact Lead, 2011:15. There are no watertight shutters between the different levels of engagement. A partnership might entail elements of all. E.g. transactional level of engagement might form part of a transitional partnership. This is best seen with Novozymes that donated money to WWF while at the same time collaborating on developing a new framework for product life cycle analysis (transitional)40 . It is important to realise that the  main  driver  behind  a  business’s  interaction  will  determine  the  type  of  engagement  that  is  formed.     CORE CONSIDERATIONS ON TRANSFORMATIVE LEVEL OF ENGAGEMENT  Consider if you appreciate co-ownership and if you are willing to share control over processes and risks  Consider if you are willing to allocate the required resources to partnership activities  Consider if you have the support from top management Fig.27 Illustration of the core considerations on transformative level of engagement 40 See http://novozymes.com/en/sustainability/stakeholder-engagement/ngo-engagement/Pages/default.aspx
  38. 38. 38 Fig.28  Illustration  of  do’s  and  don’ts  in  regard  to  transformative  level  of  engagement TRANSFORMATIVE LEVEL OF ENGAGEMENT – DO’S  AND  DON’TS DO’s  Engage if the objective is to generate innovative solutions in relation to processes, products or services  Engage if the objective is to generate win-win solutions for business and society  Utilise resources in order to trigger the innovative potential of partnerships  Create an enabling environment for dialogue and two-way communication DON’TS  Do not get involved if you are not prepared to engage at a high level  Do not expect of your partners to take on your management structures

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