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Business and Society: Corporate Social Responsibility

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Title: Business and Society: Corporate Social Responsibility


1
Business and SocietyCorporate Social
Responsibility
  • Professor Alexander Settles
  • Faculty of Management, State University Higher
    School of Economics

2
What is Corporate (Social) Responsibility (CSR)?
  • Definitions and Terms
  • Corporate social performance
  • Corporate social responsibility
  • Social Capital
  • Corporate responsibility
  • Business Ethics
  • Socially responsible investing Business Ethics
  • Human Capital
  • Corporate Citizenship
  • Corporate Accountability
  • Sustainability
  • Sustainable Development

3
What is Corporate Social Responsibility (CR)?
  • Internal
  • Business Ethics
  • Human resource / personnel management
  • Labor standards of suppliers
  • External
  • Social local and global
  • Environmental

4
Responsibilities of Business
Economic (must do)
Legal (have to do)
Ethical (Should Do)
Discretionary (Might Do)
5
Milton Friedmans Traditional View of Business
Responsibility
  • There is one and only on social responsibility
    of business to use its resources and engage in
    activities designed to increase profits so long
    as it stays within the rules of the game, which
    is to say, engages in open and free competition
    without deception or fraud. (1970)

Economic
Legal
Ethical
Ethical
6
CSR Components
  • Business Ethics Environment
  • Rule of Law Anti-Corruption
  • Labor Market Conditions
  • Environmental Risks
  • Social/Political Risks
  • Corporate Governance Risks

7
Frameworks - Triple Bottom Line
  • (a) Economic bottom line. Although main emphasis
    is on financial performance, this often refers
    not only to profit but to the philosophies behind
    a company's strategy or behavior, the
    sustainability of its businesses and its 'human
    capital'.
  • (b) Environmental bottom line. The impact of its
    products or operations on the environment, plus
    the nature of its emissions and waste and how it
    is dealing with them.
  • (c) Social bottom line. How it approaches issues
    such as ethnic and gender diversity, working
    hours and wages, staff security and its
    contribution to community services or facilities.

8
WBI Framework
9
WBI CR as an Integrated Approach
  • A comprehensive set of policies, practices and
    programs
  • Integrated into business operations, supply
    chains, decision making processes
  • Includes responsibility for current and past
    actions as well as future impacts
  • Issues vary by company size, sector, and location

10
UN Approach Global Compact
  • Human Rights
  • Principle 1 Businesses should support and
    respect the protection of internationally
    proclaimed human rights and
  • Principle 2 make sure that they are not
    complicit in human rights abuses.
  • Labour Standards
  • Principle 3 Businesses should uphold the freedom
    of association and the effective recognition of
    the right to collective bargaining
  • Principle 4 the elimination of all forms of
    forced and compulsory labour
  • Principle 5 the effective abolition of child
    labour and
  • Principle 6 the elimination of discrimination in
    respect of employment and occupation.

11
UN Global Compact
  • Environment
  • Principle 7 Businesses should support a
    precautionary approach to environmental
    challenges
  • Principle 8 undertake initiatives to promote
    greater environmental responsibility and
  • Principle 9 encourage the development and
    diffusion of environmentally friendly
    technologies
  • Anti-Corruption
  • Principle 10 Businesses should work against all
    forms of corruption, including extortion and
    bribery.

12
Russian Firms in the Global Compact Joined
  • Analytmarketing Joint Stock Company, 2001/06/21
  • Intersputnik International Organisation of Space,
    Communications Technology Hardware Electrical
    Equipment, 2003/01/03
  • Iteren, Professional, Scientific and Technical
    Services, 2004/05/11
  • Joint Stock Company Foreign Trade Association,
    2002/03/22
  • JSC "Murmanelectrosviaz", Telecommunication,
    2002/06/27
  • JSC ALTEN, Construction Materials 2005/06/21
  • Kirov State Air Enterprise, Aerospace Aviation
    2002/03/22
  • Moscow City Telephone Network, Telecommunication
    2002/06/27
  • MTK Companies Group, Telecommunication
    2002/06/27
  • Murmanelectroviaz Telecommunication 2002/06/27
  • Nefteyugansk United Airline Transportation
    Company, Aerospace Aviation 2002/03/22
  • Russian Aluminium Joint Stock Company, Metals
    Mining 2002/03/27
  • Sistema JSFC 2002/08/31
  • Svyazinvest JSC, Telecommunication 2002/06/27

13
Russian Firms in the Global Compact Joined and
submitted COP
  • CJSC ARM Group Enterprises, Utilities 2004/05/26
  • Interros, Finance Insurance 2001/10/22
  • Volga-Dnepr Airlines, Aerospace Aviation
    2000/11/14
  • Yukos Oil, Oil Gas 2001/08/15

14
US Corporate Responsibility
  • CSR / Corporate Social Performance has existed in
    some form for more than 25 years in the U.S.
  • Sources of CSR/CSP
  • Environmental regulation
  • Foreign Corrupt Practices outlawed
  • Development of Socially Responsible Investment
    community
  • Institutional investors place pressure on
    corporations
  • Employee retention and development are crucial
    for success

15
Corporate Citizenship US approach
  • Good corporate citizenship
  • Provision for a safe and healthy workplace
  • Exemplary employment practices
  • Responsible environment protection and practices
  • Contribution to the overall growth and
    development of the local economy
  • Implementation of activities that are compatible
    with local science and technology policies
  • Compliance with international, and local laws,
    focusing on anti-corruption, anti-bribery and
    transparency.

Source US Department of State
16
US CSR Activities
  • Business organizations
  • The Business Council
  • Business Roundtable
  • The Conference Board
  • Investment screening
  • Investor Responsibility Research Center
  • Dow Jones Sustainability Indexes

17
Russian Approach
  • RSPP Social Charter
  • Economic and financial stability (pay taxes)
  • Quality of production (customers)
  • Labor Relations
  • Human rights
  • Protect the environment
  • Form local associations to work with local
    stakeholders and government

18
Russian Approach
  • Measuring
  • UNDP Russian Association of Managers Report
    About the social investments in Russia in 2004
  • AMRs Business and the social development of
    Russia problems and prospects 2006
  • Reporting
  • Accountability
  • Global Reporting Initiative (GRI)

19
Examples of Russian Reports
  • Alfa Bank
  • British American Tobacco Russia
  • JSC Gazprom
  • JSC Lukoil Oil Company
  • McDonald's Russia
  • North-West Timber Company
  • OJSC MMC Norilsk Nickel
  • RAO UES
  • RUSAL
  • Sibneft (Gazprom Neft)
  • YUKOS Oil Company PC

20
Corporate Responsibility as Firm Strategy Examples
  • Environmental concerns or fair trade concerns
    allow for companies to charge premium prices
    Ben Jerrys Homemade Inc. and The Body Shop
  • Trustworthiness may generate enduring
    relationships with suppliers - Maytag

21
Corporate Responsibility as Firm Strategy Examples
  • Firms can attract outstanding employees that
    desire to work for a responsible firm Procter
    Gamble
  • They are more likely to attract capital infusions
    from investors who view reputable companies as
    desirable long-term investments - Rubbermaid

22
CSR and Risk Management
  • Protecting and enhancing reputation, brand equity
    and trust
  • Attracting, motivating and retaining talent
  • Managing and mitigating risk
  • Improving operational and cost efficiency
  • Ensuring license to operate
  • Developing new business opportunities new
    products and services, new markets, new
    alliances, new business models
  • Creating a more secure and prosperous operating
    environment

23
Sources of Social Risk
24
Social Risk Equation
25
Social Risk as Managed Strategic Risk
26
Evolution of Social Risks
27
Reputation, Corporate Responsibility, and
Competitiveness
  • Does a socially responsible commitment by
    corporations improve the business climate?
  • What are the results from the US and other
    western countries?
  • The CCG has played a role in exposing the
    academic community to Corporate Governance
    practices and CSR issues

28
Corporate Social Reporting Some of the Standards
  • Global Reporting Initiative
  • AA1000 AA1000SES AccountAbility
  • SA8000 SAI
  • Business process standards
  • ISO 9000 "quality management
  • ISO 14000 "environmental management
  • IAASBs International Standard on Assurance
    Engagements
  • ISO 26000 corporate social responsibility
    published by 2008

29
Stakeholder Engagement Model
30
Engagement Questions for the Firm
  • What is the issue or problem?
  • How complex is it?
  • What is its scope?
  • Who else has an interest in the problem?
  • What is working and not working in the current
    approach?
  • What would be accomplished by engaging others in
    the dialogue?

31
Reporting Concepts
  • Determine information requirements for early
    sensing and reporting
  • Establish reporting protocols
  • Reporting chain
  • Reporting frequency (e.g., urgent vs. routine)
  • Reporting templates
  • Create metrics that support
  • Measurement and assessment of risk impact
  • Aggregation and prioritization (including common
    taxonomy)
  • Meaningful and contextualized understanding of
    material risks
  • Develop protocols for early warning indicators
    for immediate reporting/action
  • Identify internal and external information
    sources
  • Define reporting tools

32
Reporting Standards
  • Stakeholder Involvement
  • Subject Area
  • Environmental
  • Labor
  • Transparency and Ethics
  • Industry Area
  • Forestry
  • Mining
  • Oil and Gas
  • Telecommunications
  • Hospitality

33
Sustainability Reports
  • Understanding of a companys economic, social,
    and environmental position
  • What kind of company are we?
  • What are the key issues for long term financial
    growth and sustainability?
  • What are the pressures on the company?
  • How should the company be positioned?

34
Sustainability Reporting
  • Risks to the company Defining the scope
  • What are the risks?
  • Who is evaluating the risks?
  • How often?
  • Proactive versus Reactive
  • Setting policies
  • Who sets the policies? What is the Board of
    Directors involvement?
  • Involving the company
  • Involving stakeholders

35
Sustainability Reporting
  • Who is the audience?
  • Employees
  • Government
  • Public
  • Investors
  • Stakeholders
  • What will be disclosed?
  • Operational Issues
  • Information gathering and control systems
  • Standard operating procedures
  • Internal reporting
  • Assurance

36
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