Title: International Experience in CSR and Corporate Citizenship
1International Experience in CSR and Corporate
Citizenship
- Dr. Djordjija Petkoski
- Program Leader
- Business, Competitiveness and Development Program
- World Bank Institute
- 22 November, 2007
2Background and Context
3Our world is
out of balance.
4Population, GDP Poverty
- Poverty and Developing Countries Today
- 3 billion people (survive on) under 2/day
- 1.2 billion people (survive on) under 1/day
- Global Gross Domestic Product (GDP)
- Year 2000
- 30 trillion 5 billion people 20 global GDP
- Year 2050
- 140 trillion 8 billion people 40 global GDP
(assuming 3.5 growth) - Population Growth
5Is This Our World?
- Amount needed to put every child into school by
2000 US 950 billion. It did not happen. - This amount was less than 1 of what the world
spent every year on weapons.
6Is This Our World?
- 20 of the population in developed nations
consumes 86 of the worlds goods. - The poorest 20 of the worlds population
consumes only 1.3.
7- Of the 100 largest economies in the world, 51
are corporations only 49 are countries (based on
a comparison of corporate sales and country
GDPs). - The top 200 corporations combined sales are 18
times the size of the combined income of 24 of
the total world population. - MNCs account for a quarter of global economic
activity, they employ less than 1 of the worlds
labor force, while one third of the worlds
willing-to-work population is unemployed.
8Serious Questions
- Whose problems are these?
- Who is responsible?
- Is it just a money issue?
- What are the costs?
- When are we going to pay?
- How will we pay?
- How long will we allow this to continue?
- How long can we afford to live this way?
9The Role of the Private Sector
10Financial Flows to Developing Countries
Source Global Development Finance Report, 2005
11Rising Influence Power of the Private Sector
Source Ranking based on corp. revenue data from
Fortune Magazine, October 1, 2005 and GDP data
from World Bank World Development Indicators
(WDI) Report 2005.
12Evidence of the Importance of Goodwill
Stock Market Value
NetBook Value
Goodwill
113 bn
7 bn
106 bn
75
380 bn
41 bn
339 bn
89
199 bn
21 bn
178 bn
90
499 bn
23 bn
476 bn
95
104 bn
8 bn
96 bn
92
202 bn
31 bn
171 bn
85
60 bn
8 bn
52 bn
87
46 bn
19 bn
27 bn
59
35 bn
8 bn
28 bn
78
149 bn
77 bn
52
72 bn
Source Interbrand/Citibank league table, 2001
Corporate Responsibility Risk Management,
SustainAbility, 2005
13The Role of the Private Sector
- Economic, environmental and social issues are
becoming too complex and the resources and
competencies needed to address them too dispersed
for one sector to have all the solutions. - There is a growing expectation that the private
sector can and will play a role in helping to
address these challenges. - The critical issue for all stakeholders is to
define appropriate and realistic boundaries. - Common interests and values.
14New Pressures ? New Paradigms
- Pressure on business to engage in broader
sustainability issues. - Increasing difficulty of tackling certain global
problems unilaterally. - Necessity of bringing in the comparative
advantages of all stakeholders. - Competitive benefits for the private sector to
play a more proactive and collaborative role in
development.
15Challenges to Businesses
- Businesses must go beyond the "compliance game"
and public relations. - Businesses must define the boundaries of their
social and environmental impact. - Businesses must prioritize demands for CSR and
philanthropic giving. - Businesses must deal with "activist
organizations" and making them part of the
solution.
16What Do Executives Think?
- 84 of executives agree that making broader
contributions to the public good should accompany
generating high returns to investors. - - McKinsey Global Survey Assessing the Impact
of Societal Issues, 2007.
17What Do Executives Think?
- Issues likely to gain most public and political
attention over the next 5 years - Environmental issues, including climate change.
- Privacy, data security
- Job losses and offshoring
- Health care benefits and other employee benefits
- Demand for healthier or safer products
- Political influence and/or political involvement
of companies - Workplace conditions, safety
- Pay inequality between senior executives and
other employees - Ethical standards for advertising and marketing
- Pension and retirement benefits
- Affordability of products for poorer consumers
- Demand for more ethically produced products
- Demands for more investment in poor developing
countries - Opposition to foreign investment and freer trade
- Human-rights standards
- McKinsey Global Survey Assessing the Impact of
Societal Issues, 2007.
18What Do Executives Think?
- Most important ways in which large corporations
currently contribute to the public good
McKinsey Global Survey Assessing the Impact of
Societal Issues, 2007.
19What Do Executives Think?
- Most important ways in which large corporations
cause harm to the public good
McKinsey Global Survey Assessing the Impact of
Societal Issues, 2007.
20Incentives for the Private Sector
- Incentives range from
- Investing in a stable and secure environment for
doing business by contributing to a healthy and
competent workforce, prosperous consumers, a more
attractive investment climate, and increased
competitiveness. - Managing the direct costs and risks of doing
business, such as environmental degradation,
climate change, disease and ethnic conflict can
reduce costs, improve risk and reputation
management, improve resource efficiency and
enhance productivity. - Creating new business opportunities through
innovation, value creation and competitiveness.
21Reactive ? Proactive
- Businesses must move from reactive behavior to
strategic measures. - Businesses must create new strategic
opportunities, including multi-stakeholder
engagement. - Businesses must make improvements in the
competitive context - a healthy society is a
prerequisite to economic success.
22Corporate Philanthropy vs. CSR
- CSR does NOT have to be a philanthropic activity.
- Philanthropy can be complementary to CSR.
- Philanthropy is external to a business.
- CSR is both internal and external to a business.
- CSR should be a part of a businesss core
strategy - This way, there can be a fundamental, long-term
impact on poverty alleviation and social
development by increasing national
competitiveness.
23- Poverty reduction ? collateral social benefits ?
stabilization of fragile, developing and emerging
market countries ? better business environment ?
enhanced competitiveness and investment.
24CSR Innovative Approaches
25Bottom of the Pyramid Approach
- Despite global companies ability to create
wealth worldwide, the benefits of this rarely
directly reach the 4 billion poorest people of
the world the so-called Bottom of the Pyramid
(BOP).
26Population Distribution (by Age) and Population
Growth
27Distribution of Income, Egypt
- Egypt's Gini Coefficient (measure of the
distribution of wealth in a country 0 is
perfect equality 100 is perfect inequality)
ranges from 0.25 to 0.30
28Estimated BOP market by sector 5 trillion
29BOP Approaches and CSR
- BOP approaches can be a critical component of a
companys CSR strategy and core business. - New business models
- The more traditional consumer-oriented BOP
approaches - Empowering the poor to not only enter the market
as consumers, but to be integral parts of the
supply chain as producers. - Creation of new markets AND the transformation of
existing markets.
30Platform for Business Growth
- Increased access to financial services and to
communications, notably mobile telephones is the
greatest success story. - Access to information, e.g. up to date market
prices, and to credit is now enabling the poor to
compete more effectively, and engage as
entrepreneurs in the global economy.
31Integrating CSR and BOP
- Both CSR and BOP strategies should be fully
aligned with broader corporate strategy and
long-term market positioning. - Effective CSR and BOP strategies can help deliver
sustainable business growth.
32Emerging Business Case for BOP Approaches
- Top-line Growth
- Most large businesses have saturated their
markets ? entering untapped markets opens up an
enormous new consumer, supplier, and partner base
and unlimited opportunities for innovation and
investment. - Cost Savings
- Bringing in the BOP creates supply chain
efficiencies - Outsourcing labor markets to the BOP
- BOP markets are built on different business
models - Innovation
- Extending beyond innovation in new products to
innovation in new business models.
33Some Main CSR-related Issues in the Arab World
34Areas Where Businesses Can Play a Significant Role
- Business Engagement with Youth
- Youth unemployment is a growing problem in the
region. - There is a large gap between the skills that
people have and job requirements. - Investing in young people will pay off as a more
skilled labor force is created. - Engagement of youth can also have a multiplier
effect increased entrepreneurship, wealth
creation, increased innovation, higher education
levels, reduced fertility rates. - Our program is very committed to engaging youth
and future leaders. - Videoconference on CSR in the Arab World.
35Areas, cont.
- SMEs and Family-Owned Enterprises (FOEs)
- SMEs and FOEs are very prominent in the region
and their success, development and expansion is
critical to the regions economic
competitiveness, growth, and wealth creation. - Finding ways to reach this demographic in regards
to CSR is important. - Supply chains and Clusters.
- Public-Private Partnerships
- Engaging with the government is critical for
creating incentives, enforcement, setting
national priorities, and comparative advantage.
36Areas, cont.
- Transparency and accountability
37Corruption as a Key Constraint to the Private
Sector, by Region
38Learning and Experience-Sharing
39WBIs CSR Program
- Online course
- Face-to-face workshops
- For localized training and relevance to the
clients socio-political, cultural and sectoral
context. - Case studies
- For relevant experience-sharing and learning.
- To document progress and success stories.
40CSR Program
- Focuses on
- Key elements of the policy and business
environment that support CSR and how these
elements function as an integrated system - Providing a strong justification on why CSR
should be incorporated in corporate business
strategy and country development strategy - Facilitating access to relevant research and data
and dissemination of best practices.
- Objectives
- To provide participants with an introduction to
the fundamental rationale, design and
implementation of CSR programs. -
- The course can be used to establish or
strengthen CSR policies and practices by focusing
on sustainable competitiveness and good
governance.
41CSR Online Course
- Over 30,000 participants in over 90 countries
around the world. - Course Modules
- CSR Main Concepts
- Decision-Making Frameworks
- CSR Diamond
- Building Sustainable Competitiveness through
CSR - CSR and the Poor
- An Introduction to Coalition Building Action
Plans - Target Audience
- Primarily business, but also very useful for
government, NGOs, academia, and university
students.
42CSR Program
- The WBI CSR program will be offered jointly with
the Egyptian Institute of Directors (EIoD). - The Arabic language version will be ready at the
beginning of 2008. - InWEnt Capacity Building Germany is also a
partner in this program.
43Thank You
- Dr. Djordjija Petksoski
- Program Leader
- Business, Competitiveness and Development Program
- World Bank Institute
- http//www.developmentandbusiness.org