The document discusses the choice organizations face between implementing corporate social responsibility (CSR) programs or facing regulatory penalties for non-compliance. It outlines how CSR is a self-regulated framework to prevent losses, while penalties are punitive consequences for non-compliance aimed at deterrence. The BP Gulf of Mexico oil spill is provided as an example of the large losses that can occur when an organization lacks an effective CSR system. Strategies for implementing CSR include leadership oversight and integrating it within objectives and key performance indicators. Benefits of CSR include competitive advantages, risk reduction, and improved culture.

1. CSR vs Regulatory Penalties:
A Critical Organizational Choice
& Loss Prevention Strategies
BY:
ayo ogunkoya, M.Sc., P. Ag., EP, CHSC, CRM, OHS, QSR, NCSO
PRINCIPAL HSE & RISK MANAGEMENT CONSULTANT
GENERATIVE HSE INC., CANADA

2. Ayo Ogunkoya
Principal HSE & Risk Management Consultant
Ayo Ogunkoya is a Principal HSE & Risk Management Consultant at Generative HSE Inc. His
areas of specialization are: Occupational Health & Safety, Environmental Management,
Enterprise Risk Management and Quality Assurance (Product & Service Quality).
780-462-2033 aogunkoya@generativehse.ca www.generativehse.ca
https://www.linkedin.com/in/ayo-ogunkoya-msc-pag-ep-chsc-crm-ohs-ncso-a7a57524

3. OVERVIEW
∞ CSR vs Regulatory Penalties
∞ Poor CSR Scenario: BP Gulf of Mexico Incident
∞ Strategies for Effective CSR Implementation
∞ Beneficial Consequences of CSR Implementation.

4. PENALTIES
Corporate Social Responsibilities (CSR) is an internally-
structured framework designed to self-regulate
organizational business activities, with the primary goal
of preventing the occurrence of losses when integrated
into the organization’s business model.

5. PENALTIES
There are four major factors driving CSR:
∞Legal
∞Social
∞Economics
∞Moral

6. PENALTIES
There are three key risk areas that largely constitutes
significant loss exposures to organizations, namely:
∞Health & Safety
∞Environment
∞Social Impact/Engagement
These risks constitutes hazard risks and may pose
additional risks such as financial, operational & strategic.

7. PENALTIES
Regulatory (administrative) penalties are consequential
punitive measures emanating from non-compliance with
specific regulatory requirement(s), with a primary goal of
achieving deterrence relating to offense(s).

8. PENALTIES
There are two major types of regulatory offences,
namely:
∞Absolute liability offences
∞Strict liability offences
However, some offences may be considered criminal
in nature where criminal negligence is proven.

9. PENALTIES
Loss exposures (for the purpose of this webinar) are
broadly categorized into two major areas:
∞Direct losses
∞Indirect losses
These losses emanate from legal proceedings,
reputational, operational sources etc.

10. PENALTIES
Direct losses :
∞Financial i.e. fines
∞Operational i.e stop work order
∞Loss of key employees i.e. imprisonment or resignation
∞Loss of clients/customers

11. PENALTIES
Indirect losses:
∞Reputational i.e. bad publicity
∞Financial i.e. cost of litigation or loss of revenue
∞Market i.e. loss of competitive edge

12. PENALTIES
CSR REGULATORY PENALTIES
Generative / Proactive Reactive
Increase Bottom-line Decrease Bottom-line
Increase Organizational Integrity Damages Organizational Reputation
Increase Employee Morale Lower Employee Motivation
Lower Investment Cost Higher Investment Cost
Risk Management Unmitigated Risk (Actual Loss)
Matured Corporate Culture Immature Corporate Culture

13. POOR CSR SCENARIO : BP
British Petroleum (BP) has had a series of major
incidents that had occurred over the years, that includes
but not limited to the followings:
∞2005: Texas City Refinery Explosion
∞ 15 Deaths
∞ 180 Injured Workers
∞ Environmental Pollution
∞ $50 million fine and subsequent fines over $100 million
loss

14. POOR CSR SCENARIO : BP
∞ 2007: Texas City Refinery Toxic Substance Release
∞ 143 Workers were exposed
∞ Environmental pollution
∞ Over $100 million financial loss
∞ 2010: Texas City Refinery Chemical Release
∞ Environmental pollution
∞ 7.7 tonnes of Benzene
∞ 17 tonnes of Nitrogen oxides
∞ 186 tonnes of Carbon monoxide

15. POOR CSR SCENARIO : BP
Other incidents occurred that resulted in financial losses
in excess of $100 millions over the years. However, the
corporate culture of BP never changed until it reached a
turning point on 20th of April, 2010 when the Deepwater
Horizon Incident occurred in Gulf of Mexico in US.

16. POOR CSR SCENARIO : BP
Deepwater Horizon Incident was a single incident with
significant multi-layered loss exposures:
∞Hazard Risk Losses:
∞ 11 Deaths
∞ Environmental pollution (4.9million barrels – largest oil spill
in history)
∞ Rig loss

17. POOR CSR SCENARIO : BP
∞Operational Risk Losses:
∞ Zero production attained
∞Financial Risk Losses:
∞ Over $50 billion ($50,000,000,000)
∞Strategic Risk Losses:
∞ Strained relationship with US government
∞ Compromised reputation and public outrage

18. CSR IMPLEMENTATION
STRATEGIES
CSR implementation requires the development of a
sound CSR framework or management system in place,
prior to the consideration for its implementation.
In today’s business world, effective implementation of
CSR management system is key to the sustainability of
any business organization.

19. CSR IMPLEMENTATION
STRATEGIES
CSR implementation strategies may include:
∞ CSR must be overseen by the org. leadership i.e. CEO
∞ CSR must be integrated into overall organizational
objectives.
∞ CSR management system should be developed by highly
competent professional.

20. CSR IMPLEMENTATION
STRATEGIES
CSR implementation strategies may include (cont’d):
∞ CSR must have well-defined and clear deliverables and KPIs
∞ CSR KPIs must be measured, analyzed, reported &
monitored
∞ CSR must be periodically audited, at least once a year.

21. CSR IMPLEMENTATION
STRATEGIES
CSR implementation strategies may include (cont’d):
∞CSR training must be provided to key employees of the
organization
∞Management Review (MR) of the CSR management
system must be conducted periodically, at least once a
year

22. BENEFITS OF CSR
IMPLEMENTATION
Effectively implemented CSR have benefits that includes:
∞CSR implementation offers business organization the
competitive advantage through brand differentiation
∞CSR is an enterprise risk prevention and reduction
strategy

23. BENEFITS OF CSR
IMPLEMENTATION
Other benefits :
∞Increase employee morale
∞Increase bottom line
∞Increase organizational integrity
∞Aids the maturation of corporate culture

24. CHANCE OF LOSS (MODEL)
REGULATORY
PENALTIES
CSR

25. GENERATIVE HSE INC.
Health & Safety, Environment & Risk Management Consulting
1420 – 37C AVENUE,
EDMONTON, ALBERTA T6T 0H8
CANADA
Phone (Direct): 1-780-462-2033
(Cell): 1-780-902-2519
E-mail: info@generativehse.ca
Website: www.generativehse.ca

26. QUESTIONS?
780-462-2033 aogunkoya@generativehse.ca www.generativehse.ca
https://www.linkedin.com/in/ayo-ogunkoya-msc-pag-ep-chsc-crm-ohs-ncso-a7a57524