- 1. Corporate ResponsibilityRevision Lecture Birkbeck, May 13
2010 Toby Webb, Ethical Corporation Exam time and date: 7th June at
2.30 4.30pm
2. Lecture one: Introduction to CR - Definitions
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- Druckerwas one of the first to explicitly address CSR, as one
of the eight key areas for business objectives developed in his
1954 book, The Practice of Management
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- "The social responsibility of business encompasses the
economic, legal, ethical, anddiscretionary expectations that
society has of organizations at agiven point in time ". ( Carroll ,
1979)
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- There is one and only one social responsibility of businessto
use itsresources and engage in activities designed to increase its
profits solong as it stays within therules of the game , which is
to say, engage inopen and free competition, without deception or
fraud.(Friedman 1970)
3. Lecture one: Introduction to CR - History
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- Scandals in the 1950s and 1960s over chemicals
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- Increasing wealth in the 1960s in Europe e.g. Sweden
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- Late 1960s and early 1970s activism hits temporary peak.
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- Earth Day 1970, publication of the Limits to Growth report,
Erlich's Population Bomb
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- 1980s also saw inner city riots in the UK
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- 1980s env. cases: Barclays, Bhopal, Exxon Valdez
4. Lecture one: Introduction to CR - Definitions
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- 1990s saw Nike emerge as a modern case study
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- Shell and Brent Spar and Nigera (1995)
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- Body Shop values report (1995)
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- Late 1990s No Logo, Seattle WTO riots
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- Jubilee 2000 Campaign on African debt
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- 2002 Johannesburg Summit on Sustainable Development,
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- 2001 scandal over HIV / Aids drugs distribution in Africa
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- 2003/4 Chinas economic explosion significant
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- Since 2003/4 CSR has become CR and SUSTAINABILITY
5. Significant MODERN global responsible businessinitiatives -
Some pros and cons
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- UN Global Compact / UN PRI Get CEOs signed up, but lack real
teeth and bite!
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- GRI Useful place to start, danger of reliance on box
ticking
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- John Ruggieswork Likely to impact business lobbying on better
governance in future
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- Carbon Disclosure Project increased information for regulatory
powers to use. May be more useful for legislation purposes than for
carbon traders
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- EITI / Kimberly Case studies of real success but hard to
replicate in areas where issues are more complex
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- ISO 26,000 very hard to standardise subjective issues for
business!
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- Issue specific collaborations : Rainforest Alliance / Fair
trade / cocoa / fish / timber / palm oil / soy / cotton / labour
standards incredibly influential in terms of policy and even tier 1
supplier concerns
6. Lecture Two:Greenwash, Communications and NGO engagement
- CSR Beginnerone-way communication , lack of a dialogue with
stakeholders which are even not clearly defined (business partners
and clients). Lack of CSR strategy.
- CSR Pretendertwo-way asymetrical communicationmodel with
reactive nature if there is a need one. A company tries to control
its environment, image is very important. Stakeholders defined as:
employees, clients and local community, their priorities are not
clearly identified.(CSRStrategic philanthropy model ).
- CSR Pioneertwo-way symmetrical communication with particular
stakeholder groups,constant dialogue based on stakeholder
engagement, mutual benefits (Stakeholder CSR model). This
communication model can lead toCSRinnovation model within business
and society as well as to a newCommunity PR model .( Kuraszko, I.
(2009) Public relations and Corporate Social Responsibility PHD
Dissertation. University of Warsaw)
7. Lecture Two:Greenwash, Communications and NGO engagement
- A company understands its role in society
- - and wants to develop opportunities
- PR/CR is focused on building relationships
- Strategic philanthropy model themain purpose of CR/PR is
building image
8. Lecture Two:Greenwash, Communications and NGO engagement
- Hollender, J., Breen, B. (2010) The Responsibility Revolution
(Jossey-Bass) (ps.109-11)
- Four types of green pretenders:
- The Shape Shifter : Greens image without changing its
essence:BPand Beyond Petroleum. Clashed with: oil spills in Alaska,
explosions in Texas and investments in Canadian Tar Sands
- The Propagandist : Blunts genuine bad news with fake good
news.Chevronand Ecuador. Company used independent ex-CNN journalist
to make real-looking mockumentary presenting their side of the
story
- The Incrementalist : Hypes narrow, eco-friendly efforts without
changing core, eco-unfriendly business.Clorox : Bought and produces
some eco friendly products, but is mainly a bleach company
promoting some products as if any stronger would be banned in 12
states.
- The Double Talker : Puts serious marketing and R&D into
green, but profits from pollution and undermines progressive
regulation.General Electric : Launched Ecomagination, products and
services that deliver sustainability improvements of at least 10%.
$2.5 billion investment. But the company continues to try and
weaken anti-smog rules for locomotives, fights mandatory CO2
cuts
9. 10. Lecture Three: CR, Business Strategy and Innovation
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- Huge proportion of spend on OECD country procurement from
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- Government buying services, products
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- Desire to cut carbon emissions in business = requirements
for
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- large suppliers to demonstrate some progress. E.G: CDP,
CRC
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- Denmark : All listed companies (1000 approx) must mention CSR
in annual reports
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- Sweden : All Government-owned companiesmust use GRI framework
for reporting
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- Taiwan : Financial Supervisory Commission says all listed firms
must disclose progress on social responsibility
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- UK Carbon Reduction Commitmentdeveloping CO2 allowances for all
UK firms spending more than 1,000,000 a year on electricity (2010,
capped from 2013)
Sustainability concerns and procurement of services:Governmental
drivers 11. Lecture Three: CR, Business Strategy and Innovation
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- Target the 4 billion people living on less than $2 per day
(1998) or 3.1 billion
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- living on less than $2.50 a day (Ethicalcorp 2009)
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- Prahalad (2004) The Fortune at the Bottom of the Pyramid
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- Hart (2005) Capitalism at the Crossroads
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- Stop thinking of the poor as victims
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- Start seeing them as resilient and creative entrepreneurs
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- As value-demanding consumers poor of today are middle-class of
tomorrow
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- Considers poverty reducing benefits in capacity building
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- CSR: Innovation and opportunity, key writers:
12. Lecture Three: CR, Business Strategy and Innovation
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- Hart suggests: focus on poor asbusiness partnersandinnovators ,
rather
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- than just as potential producers or consumers.
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- Hart'sBase of the Pyramid Protocol : business partnerships with
income-poor
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- communities "co-create businesses and markets that mutually
benefit
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- the companies and the communities".
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- Adopted by the SC Johnson Company and Solae Company (subsidiary
of DuPont)
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- Aneel Karnani (2007) says no fortune at the bottom of the
pyramid!
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- Says for most multinational companies the market is actually
very small.
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- Karnani suggests only way to alleviate poverty is to focus on
the poor asproducers , rather than as amarketof consumers.
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- CSR: Innovation and opportunity, key writers:
13. Lecture Three: CR, Business Strategy and Innovation
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- Microcredit : 5.8 million borrowers, small loans averaging $120
(bopnetwork.org 2006)
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- ITCande-Choupals : (village squares wired up) small farmers
check market trading price of produce and sell it directly to
ITC.
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- Farmers andITChave increased their revenues, efficient
communication between buyer and seller
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- ( Microsoft andHP do similar work in countries such as India
via rural communications centers: more philanthropic and
political)
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- Hindustan lever : Shampoo that works well with cold water in
small sachets
14. Lecture Three: CR, Business Strategy and Innovation
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- Companies all said for years employees arenumber one driverfor
CSR (KPMG 2004)
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- 2006 Mori survey found58%of employees in the UK thought the
social and
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- environmental responsibilities of their organisation were
important.
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- 50mis given to charities each year through theGive As You
Earnscheme, the most popular of such initiatives
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- Analysis suggests employees' perceptions of corporate social
responsibility have a major impact onorganisational commitment
.
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- (Brammer and Millington, University of Bath School of
Management 2006)
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- CSR is cheaperthan pay rises, may help in a recession...
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- Opportunity: Employees and CSR
15. Lecture Three: CR, Business Strategy and Innovation
- New opportunitiesfor products: Certification, Wind turbines,
industrial technology (i.e. Unilever, Kraft, Mars, Cadbury, GE,
Siemens, Toshiba)
- Preferred partnerfor leading companies: Big firms expect
more
- Supporting diversesupplier base, develop loyal SME
suppliers
- Increased likelihoodof government contracts: Over time
- Closer and more trustedrelationshipswith customers, NGOs
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- CR and modern business development :
16. Lecture Three: CR, Business Strategy and Innovation Where we
see the most progress: Niche brands : Innocent, Seventh Generation,
Good Energy, Bullfrog Power, Triodos bank, Interface, Timberland,
Body Shop etc Big Industrial companies : GE, Siemens, Toshiba,
Nissan, Toyota, Intel Consumer brands : P&G, Unilever, Marks
& Spencer, Cadbury, Tesco/Asda Reputationally vulnerable
companies : Pharmaceuticals, heavy industry, extractive industry
firms Shell, BP, Exxon, BHP, Sakhalin Energy, Xtrata, and even some
banks!
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- CR and modern business development :
17. Lecture 4: Business, Human Rights and Supply Chain
- Universal Declaration on Human Rights
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- All human beings are born free and equal in dignity and rights.
They are endowed with reason and conscience and should act towards
one another in a spirit of brotherhood
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- Adopted by UNGA, 10 thDec 1948
- Convention on the Rights of the Child
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- the United Nations has proclaimed that childhood is entitled to
special care and assistance
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- Adopted by UNGA, 20 thNov 1989
18. Labour-specific human rights
- International Labour Organisation conventions
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- The UN specialized agency which seeks the promotion of social
justice and internationally recognized human and labour rights
- Many of them, however, the fundamental 8 cover:
-
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- 87: Freedom of Association and Protection of the Right to
Organise Convention, 1948.
-
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- 98: Right to Organise and Collective Bargaining Convention,
1949
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- The Abolition of Forced Labour
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- 29: Forced Labour Convention, 1930
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- 05: Abolition of Forced Labour Convention, 1957
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- 100: Equal Remuneration Convention, 1951
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- 111: Discrimination (employment and Occupation) Convention,
1958
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- The Elimination of Child Labour
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- 138: Minimum Age Convention, 1973
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- 182: Worst Forms of Child Labour Convention, 1999
19. Why not just legislate?
- Core Coalition and others have called for international
regulation of companies in relation to human rights
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- Would provide clarity and uniformity
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- If its important, regulate.
- Ignores complexity of international law
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- International regulation not a realistic option except in the
long term
20. Process of international law
- There is no such thing as a global government
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- International law therefore not a realistic option
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- Adoption of Convention at UNSC
- This is then the beginning of national processes
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- Adoption of the UN Convention into national law
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- This then supposes the national law is rigorously
implemented
- Look at International Criminal Court (ICC)
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- Comes into operation 2002
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- China, America and others still not party to it.
21. Progress nonetheless
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- How companies address these issues in their own operations
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- Relativelystraightforward
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- Many still fail to act, however
22. Enter John Ruggie
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- Former UN Deputy Secretary-General
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- Currently Professor of International Relations at KSG,
Harvard
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- Comes from Realist background, and has huge insight into how
things work
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- UN Secretary-Generals Special Representative on Business and
Human Rights
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- Mandate from 2005, extended last year for a further 3
years.
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- How can you govern business in relation to human rights issues
given the global governance structures that we have?
- April 08 3-part approach proposed
23. The state duty to protect
- Primary responsibility for human rights lies with states
- States need to encourage corporations, by
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- Encouraging positive corporate culture
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- Align and cohere policies
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- Seeking and receiving greater support from international
agencies
24. The corporate duty to respect
- The baseline responsibility of companies is to respect human
rights.
- Within its sphere of influence, a company should exercise
leverage over other actors that are causing harm.
- Suggests use of existing processes to exercise this duty to
respect
25. Access to remedies
- Strengthen existing frameworks
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- For example, NCPs of the OECD Guidelines
- Companies should institute grievance mechanisms as part of
their duty to respect
- Use of non-judicial approaches to dispute resolution and access
to remedy
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- Cf Gacaca process in Rwanda.
26. Lecture Five: Embedding CR CR staff need to know too much
27. Lecture 5: Embedding CR But have too few resources 28. Lecture
Five: Embedding CR Solutions? Collaboration But there are some
obstacles to hurdle: Convincing the board and senior management
Working with a small budget Decentralising CR activity Measuring
successSUCCESS: DESIGNING CR METRICS AND SELECTING TOOLS 29.
- CSR Champions and champion networks (Doughty Center 2009)
- Emerging, play a strategic role, causing change and sustaining
it long term
- One of a number of tactics to embed CR
- Advantages: work directly with staff, connect division and
regions, propagate CR practices
- Allow a 'credible two-way interface between global and local
(CR) in international companies
30.
- CSR Champions and champion networks (Doughty Center 2009)
- Emerging, play a strategic role, causing change and sustaining
it long term
- One of a number of tactics to embed CR
- Advantages: work directly with staff, connect division and
regions, propagate CR practices
- Allow a 'credible two-way interface between global and local
(CR) in international companies
31.
- Key tips for success in CSR champions networks:
- Medium term at least: 3-5 year plans
- Must seek two way info flows
- Look for innovative ideas
- Horizontal ownership of CR
- Identify leaders and clarify roles
- Localised / staff motivating
- Builds CR profile / efficient channelling of resources
32.
- How big are champions networks?
- 80-500 depending on business, both full and part time
- Use of ICT vital: intranets, email, but also in induction
packs
- Data gathering important, along with conference calls
- Cases include: Reed, Alliance Boots, Accenture, PwC
33. Lecture Six: Corporate Responsibility Reporting and
Auditing
- An attempt by large companies to communicate about
non-financial impacts on society
- Began in printed form as self produced reports, continues to be
more 'push' than 'pull. Now both print and online form
- Companies seek to promote themselves to media, employees,
stakeholders. All say shareholders not interested!
34.
- CSR reporting now including more hard data on performance
(H&S and Climate Change) in biggest firms
- Scepticism: NGOs and many others cynical. Honesty in reporting
improving slowly
- Global ReportingInitiative (900 firms, 2006)
- Global Compact(2000-3000, 2008)
- Impact on quality debatable!Companies not innovating quickly.
Communications a major issue!
-
- How is reporting changing?
35. What do academics say about reporting?
- Lack of research focus in academia on link to strategy
- Companies make general disclosures: 71% of Aus. reporters give
no data on performance!
- 41 % of UK firms fail to offer targets in reporting
- Case study approach shows lack of consistency in approaches:
due to difference in firms , making comparison difficult
36. What do academics say about reporting?
- Morsing and Schultz(2006)
- Discuss risks of raising head above public parapet
- Stakeholder expectations a moving target: need for reporting to
evolve
- Increasingly sophisticated approaches needed
- Suggest three models exist:
- Information strategy / Response strategy / Involvement
strategy
37. Auditing and Verification of CSR / Sustainability
reporting
- Companies aware of scepticism and concerned about who reads
reports
- Many moving towards stakeholder panels and statements
- E.G (Shell, BP, Imperial Tobacco, Guardian)
- Kolk (2006): Large variation in how it is done, many subjective
statements
- Concludes assurance/verification is not wholly convincing or
reliable
38. Lecture Seven: Business and Climate Change McKinsey
Scenarios: 1) No change in policy= temp rise up to7 degrees/ 1-2
billion people overwhelmed / 4 billion people at risk / Floods and
water shortages / Total ice cap melt / Amazon may die 2) Developed
nations lead the way,spend$350 bnper year by 2030 = sea levels rise
/ low level islands threatened / hunger increases slower than
scenario 1 / Canada and Northern Europe become more productive /
Major increase in extreme weather events 3) Global action , spend
is$565 bnper year by 2030 = World warms only2 degrees/ hotter areas
suffer on crop yields / some ice at poles remains / increase in bad
weather and floods, but manageable / tropical disease spread is
significant, but limited 39. Companiesdirectly responsiblefor at
least40%of all global greenhouse gas emissions 2009 PWC CEO
survey:40% of CEOswerenot concernedaboutclimate change .7%of CEOs
extremely concerned.42%extremely concerned abouteconomic downturn
UN/Trucoststudy says if biggest companies held accountable for
environmental costs,1/3 of profitswould be lost Total corporate
environmental damage cost estimated at$2.2 trillionin 2008 Three
billion carsexpected on the roads by 2050. Prius sales represent
6.4% of Toyotas total annual sales in 2009 40. Business and Govt
action:
- Wal-Mart:committed to being supplied 100% by renewable energy,
creating zero waste and selling environmentally-friendly
products
- BT :80% carbon emissions reduction target by 2020
- ArcelorMittal , Corusand ThyssenKrupp :1 billion Euro research
project on gas recycling and CCS in EU
- Interface:Aiming to beenvironmentally neutralby 2020. 60%
achieved
- South Korea:South KoreaGreen Growth Plan : $84bn five-year
programme to develop green industry as growth engine for entire
Korean economy
41. Business action:
- Tesco : 100 million climate technologies fund, pledged to cut
energy usage per square foot by50%by 2010, compared to 2000
levels
- Iberdrola : Worlds largest provider of renewable energy: 44GW
of renewable assets at different stages of development,95%of it
wind power
- Shell:Includes cost of carbon emissions when budgeting for all
new projects
- Unilever : Reduced CO2 emissions in manufacturing operations by
more than30%in a decade
- Lafarge : 20% cut in net emissions per tonne of cement
worldwide and a10%cut in absolute emissions in industrialized
countries by 2010, from 1990 levels
42. Business and Climate ChangeMarks and Spencer: Achievements,
commitments, opportunities
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- Plan Alaunched January 2007
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- Stores 10% more energy efficient. Logistics 20% more fuel
efficient
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- Reduced food packaging by 16% and food carrier bag usage by
83%.Saved 50 million in 2009
-
- 2010:80 new commitments . Complement the existing 100 which
will still be delivered by 2012 (45 already achieved).
-
- Build Plan A into every one of the 2.7 billion individual
M&S products sold each year by 2020 ( 50% of products by 2015
)
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- Help 1 million M&S customers develop their ownpersonal Plan
Aby 2015 and 3 million by 2020.
-
- 100,000 prize (Your Green Idea) for thebest customer ideato
help green M&S
-
- Offering employeesfree loft insulation
43.
- Huge shifts in manufacturing to Asia in particular since the
late 1980s
- This includes environmental impacts: e.g. waste paper to china,
'recycling' of electronics to Africa
- Also includes huge shift in carbon intensity to Asia. We have
outsourced our emissions
- New global risks have emerged for companies: Chevron in
Ecuador, Trafigura in C'ote D'ivoire, emissions generated in low
cost countries complete with political instability
- Post Kyoto negotiations underway in 2009 mean greater pressure
on smaller economies on carbon emissions, GHGs, forestry. More
focus on EcoSystem Services
Lecture eight: CR and Globalisation Offshoring emissions, waste
and environmental impact 44.
- Anti-corruption enforcement will grow (DoJ / SEC / SFO stats
for 2007/8)
- Chinese and Asian labour laws may tighten up
- Recession ethical supply chain investment cuts by
companies
- Human rights will grow in importance (Ruggie)
- Role of business in development will grow (Bottom of Pyramid
strategies, EU lobbying)
- Consumer, NGO and political suspicions of big business
increased by recent events in banking, financial and corporate
scandals (Banks, Satyam, Madoff)
Lecture eight: CSR and Globalisation The outlook 45. Exam
questions and indicative answers
-
- Which industry sectors are most active in global Corporate
Social Responsibility (CSR) and why? One answer to this question
would be as follows: The industries most active are those that are
most vulnerable to public pressure and poor reputations.This is
because companies seeking to maintain political favour, companies
deeply concerned about their reputation with both consumers and
employees, companies in high impact sectors such as natural
resources (oil, gas and mining) spend most on CSR usually companies
who are most vulnerable to upcoming changes in law, such as those
emitting a lot of CO2.
46. Exam questions and indicative answers
-
- Should UK law be changed to ensure that UK companies can be
sued in UK courts for alleged malpractice or complicity in human
rights abuses overseas?In your answer, provide examples to
illustrate your response. One answer to this question would be as
follows:No, because that would mean that anyone could sue a UK
company in a UK court for alleged abuses or complicity. This would
attract many spurious law suits designed to persuade UK firms to
settle out of court, as with the Alien Tort Claims act in the UK.
There is also a serious question of who would investigate these
abuses and pay for the investigations.This would also mean the
undermining of legal institutions in other, usually emerging
economies.NGOs such as the CORE campaign argue that this is the
best way to ensure corporate accountability for human rights.
47. Exam questions and indicative answers
-
- Can voluntary approaches to cutting carbon emissions can be
made to work effectively?Use examples to illustrate your answer.
One answer to this question would be as follows:They can, but only
to a certain degree. It can depend on what you mean by
'work'.Emissions trading can have an impact if the carbon price is
high enough.Emissions trading currently only applies to very large
polluters.There are plans to expand this in the UK in 2010 but it
will likely only have a limited impact.Voluntary approaches to
improving corporate environmental performance have been shown to
have limited impact.Changes in the law have driven much more change
(WEE directive, REACH etc).This is not to say voluntary efforts do
not drive change (Responsible Care in chemicals).But voluntarism
has definite limits for corporate environmentalism, not least the
free rider problem in voluntary schemes.
48. Exam questions and indicative answers
-
- Can voluntary approaches to cutting carbon emissions can be
made to work effectively?Use examples to illustrate your answer.
One answer to this question would be as follows:They can, but only
to a certain degree. It can depend on what you mean by
'work'.Emissions trading can have an impact if the carbon price is
high enough.Emissions trading currently only applies to very large
polluters.There are plans to expand this in the UK in 2010 but it
will likely only have a limited impact.Voluntary approaches to
improving corporate environmental performance have been shown to
have limited impact.Changes in the law have driven much more change
(WEE directive, REACH etc).This is not to say voluntary efforts do
not drive change (Responsible Care in chemicals).But voluntarism
has definite limits for corporate environmentalism, not least the
free rider problem in voluntary schemes.
49. Exam questions and indicative answers
-
- Does using theGlobal Reporting Initiative (GRI) reporting
guidelines mean that companies who do so are better at CSR? One
answer to this question would be as follows:While the GRI is a
comprehensive list of indicators that companies can report against,
critics claim that it encourages box ticking.Some of the best
companies at CSR do not use it, but report on indicators developed
internally, rather than taking a cookie cutter approach.While GRI
provides useful guidance, over-usage can lead to the guidelines
driving the report, rather than the report being about the specific
issues inherent in the business.However, many of the companies that
use GRI to a good extent are among the best at CSR according to
some commentators.But this does not mean companies that don't make
much use, if any, of them must be bad at CSR reporting.
50. Exam questions and indicative answers
-
- Do CSR rankings mean that the companies included in the ranking
are more ethical than those that are not?Use examples to illustrate
your answer. One answer to this question would be as follows: No.
Rankings are a bit of a myth.It is true that companies who are
included in the rankings tend to bethose that are active on
CSR.However, trying to compare an oil firm with a consumer goods
firm is pointless.This is because they are two very different
industries.Indicators are not standardised.Social and environmental
impacts are very different.How would one take what is essentially a
subjective area (social performance) and credibly compare companies
in different industries with differing operations?
51. Exam questions and indicative answers
-
- Can CSR lead to real business innovation in large
companies?Illustrate you answer using examples. One answer to this
question would be as follows:Yes, it definitely can. Examples
include bottom of the pyramid business strategies and employee, NGO
and stakeholder engagement as early warning systems and places to
spot innovation.Examples might be: British Gas seeking customer
loyalty by encouraging energy efficiency, which saves customers
money; Micro-finance: An industry based entirely on the day to day
needs of poor people in emerging economies; Employee engagement:
companies who engage employees in CSR have more satisfied and
motivated workers