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International Experience in CSR and Corporate Citizenship

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Ford Motor. 35. 186,597.00. Finland. 32. 195,645.20. General Motors ... Putting profits ahead of people's well-being. 65% Polluting, damaging the environment ... – PowerPoint PPT presentation

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Title: International Experience in CSR and Corporate Citizenship


1
International Experience in CSR and Corporate
Citizenship
  • Dr. Djordjija Petkoski
  • Program Leader
  • Business, Competitiveness and Development Program
  • World Bank Institute
  • 22 November, 2007

2
Background and Context
3
Our world is
out of balance.
4
Population, 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

5
Is 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.

6
Is 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.

8
Serious 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?

9
The Role of the Private Sector
10
Financial Flows to Developing Countries
Source Global Development Finance Report, 2005
11
Rising 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.
12
Evidence 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
13
The 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.

14
New 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.

15
Challenges 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.

16
What 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.

17
What 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.

18
What 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.
19
What 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.
20
Incentives 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.

21
Reactive ? 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.

22
Corporate 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.

24
CSR Innovative Approaches
25
Bottom 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).

26
Population Distribution (by Age) and Population
Growth
27
Distribution 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

28
Estimated BOP market by sector 5 trillion
29
BOP 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.

30
Platform 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.

31
Integrating 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.

32
Emerging 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.

33
Some Main CSR-related Issues in the Arab World
34
Areas 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.

35
Areas, 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.

36
Areas, cont.
  • Transparency and accountability

37
Corruption as a Key Constraint to the Private
Sector, by Region
38
Learning and Experience-Sharing
39
WBIs 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.

40
CSR 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.

41
CSR 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.

42
CSR 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.

43
Thank You
  • Dr. Djordjija Petksoski
  • Program Leader
  • Business, Competitiveness and Development Program
  • World Bank Institute
  • http//www.developmentandbusiness.org
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