corporate social responsibility and social accounting: supporting sustainable development prepared...
TRANSCRIPT
Corporate Social Responsibility and Social Accounting:
Supporting Sustainable Development
prepared for
World Environmental CenterApril 27, 2000
Overview Business for Social Responsibility (BSR) Corporate Social Responsibility (CSR)
CSR Then & Now Why Interest is Growing / Links to SD
Measuring and Reporting on CSR Current State of Affairs Social and Ethical Accounting, Auditing &
Reporting What is it? Why do it? Who is doing it? And how?
Indicators, Auditing and Verification
Conclusions
Business for Social Responsibility
A US-based global business organization with more than 1,400 member and affiliated companies
Two organizationsA non-profit member-based trade associationAn education fund with a public awareness mandate
A network of global partnerships
A broker of best practices
Mission and Purpose
BSR"To improve the quality of life for current and future
generations by helping business [members] understand, implement and improve socially responsible practices as an integral part of their success”
BSREF“To promote corporate social responsibility in the global
business community and to promote cross-sectoral collaboration, thereby helping companies profit in ways that support the development of a more just and civil society and a sustainable economy”
Corporate Social Responsibility
CSR - Then
Who? ShareholdersWhat? Financial ImpactHow? Profit
CSR - Then
LoadingDock
Point of Sale
ProductionProduction
CSR - Now
ProductionProduction
Employee Issues Philanthrop
y
LoadingDock
Point of Sale
Voluntarism
Environment
CED Community
InvolvementEthics
Governance
HumanRightsMarketplace
Mission, Vision, Values
Accountability
Workplace
Transparency
Sourcing
ContinuousProductResponsibility
. . . AndMaximizeShare Value!Design
CSR - Now
Who? Multiple StakeholdersWhat? Financial, Social, &
Environmental ImpactsHow? Profit, employee
satisfaction and retention, % recycled
content, etc.
Defining CSR, Its Scope
Many definitions . . . often used:Achieving commercial success in
ways that honor ethical values and respect people, communities and the natural environment
BSR stresses the idea that this encompasses content and process, both what you do and how you do it
Corporate Social Responsibility: Why Interest Is Growing
Business Benefits Provides access to capital and improves financial
performance Reduces operating costs Improves ability to hire and retain qualified employees Increases productivity and quality Assists in risk management Enhances brand image and reputation Contributes to customer loyalty and increased sales Reduces regulatory burden/generates greater public support
Values (Internal and External)Complexity
Values Shifts -- Poll DataEnvironics/The Conference
Board/PWBLF23 countries, 1999: 25,000 surveyed
90% want companies to focus on more than profitability
60% form an impression of a company based on its social responsibility
In the past year: 40% responded negatively (talked negatively about)
to companies perceived not socially responsible 17% had actually avoided the products of companies
perceived not socially responsible
Values Shifts -- Poll Data Environics/The Conference
Board/PWBLFFactors that most influence public impressions of individual companies
social responsibility brand quality / reputation business fundamentals
Values Shifts -- Poll Data PWC/Reputation Institute
United States, 1999: 10,830 surveyed
75%-95% of consumers expect companies to avoid Bribery and corruption Child labor in their supply chain Employment discrimination Health & safety violations Harm to the environment
Values Shifts -- Poll Data
Financial Times/PWC2000 “Most Respected Companies Survey,” 750 CEOs asked about the most important challenges for companies today
“Increased pressure from stakeholder groups” was ranked second most important. Pressures include:– Shareholder resolutions– Consumer boycotts– Employee Strikes– Loss of government contracts, financing, and
insurance– Elimination from screened mutual funds
Stakeholder Maps
Complexity -- New Roles for Organizations
(Courtesy of Mark Wade, Shell International)
Government Employees
CustomersSociety
Share-holders
NGOs
Company
Government Employees
CustomersCompany
Share-holders
NGOs
Society
OLD NEWMaps are representational only- not comprehensive
(WTO Photo #1)
(WTO Photo #2)
Measuring and Reporting on Corporate
Social Responsibility
Government• UK DFIF Ethical Trading Initiative• UK FCO+: Landmines• EU proposed Code for MNCs• EU Parliamentarians demand for MNC Code• US FCPA
Intergovernmental Organisations• OECD Guidelines for MNCs (tbr 1998)• ILO Tripartite Declaration of Principles• ILO Labour Stds re: 1997 WTO meeting• UDHR
NGO• “New” Sullivan Principles• CEP SA8000• ECCR/IRRC/TCCR Principles for Global Responsibility• NEF/CAFOD Open Trading Initiative• InterAction Council: UDH Responsibilities• International League for Human Rights - Human Rights Auditing Standards and Procedures Projects• Amnesty International Human Rights Guidelines for Companies• Oxfam Campaign for “basic rights”• CERES principles• Consumers International: Consumer Charter
for Global Business• The Interfaith Declaration on International Business Ethics
Academic• Charter of Common Responsibilities in Business (University of Friborg)
IndustryCaux Round Table Principles for Business ICC Charter for Sustainable DevelopmentInternational Code of Ethics for Canadian Business Corporate Social ResponsibilityICC Rules of Conduct on WBCSD WG on Bribery and Corruption ICC Int Code of Advertising Practices
Courtesy of Mark Wade, Shell International, 1999
Current State of Affairs:The Proliferation of New
Standards
Current State of Affairs:Societal Expectations
High
Low
Low High
As trust diminishes, the demand for transparency in the form of assurance mechanisms increases
(Courtesy of Mark Wade, Shell International)
“Trust me”
Tru
st
Transparency
Trend
“Tell me”
“Show me”
“Involve me”
What Is It? Social Auditing Human Accounting Intellectual Capital Social Accounting Holistic Accounting Ethical Auditing Social Balances Ethical Budgets Ethical Accounting
(Courtesy of Simon Zadek, ©1999)
Why Do it? Measuring what counts. Quality management. Recruitment and retention of employees. External stakeholder engagement/trust. Partnership development. Investor information. Enhanced governance. Government and regulatory relations. Risk assessment and management.
(Courtesy of Simon Zadek, ©1999)
Who is Doing It?
(Images of Social Report Covers)
How Do People Do It? Assessing the financial costs and impacts of social
and environmental initiatives Rating performance against internal and external
benchmarks Engaging in and reporting on stakeholder
dialogue and partnerships Producing reports on social and environmental
impact Verifying integrity of data through internal and
external methods Institutionalizing changes based on the process Measuring continuous improvement
What is Social and Ethical Auditing, Accounting, and
Reporting?
Social and Ethical Auditing, Accounting,
and Reporting (SEAAR) SEAAR is the expression used by the Institute
of Social and Ethical Accountability (London, UK) to describe the emerging field of social auditing
SEAAR is a management tools companies can use as they try to become more socially, economically, and environmentally sustainable
SEAAR
A means to improve social performance Focuses on governance, accountability,
and transparency -- how an organization makes and communicates its decisions
“a portfolio of tools and techniques for measuring, understanding, reporting on, and ultimately improving an organization’s social performance”(Adapted From New Economics Foundation Briefing Paper, 1998)
Why Do It?
Values
StrategyPublic or Media Interest
Drivers for SEAAR
(Adapted from Building Corporate Accountability, 1997)
SEAAR - Business Benefits Increases transparency and accountability
Clarifies company values and scope of influence Manages expectations by improving
understanding CSR performance affects stakeholder decisions
re employment, spending and investment Strengthens license to operate Dialogue creates learning and minimizes conflict Deals with “trust me” to “show me” transition Helps manage complexity
Who Is Doing It?
SEAAR Leadership initially European (UK), shifting to U.S.
The U.S. has been strongest at measuring and reporting on environmental and human rights issues
Growing convergence; efforts like the CERES-led Global Reporting Initiative are trying to set a global standard for ‘sustainability reporting’ that is equal to financial auditing in terms of the quality and rigour with which data are compiled and audited
SEAAR Leadership Examples The Body Shop International
BP Amoco British Telecom Diageo Ford Motor Company Nike Novo Nordisk Shell International South African Breweries Tata Iron and Steel
Who In The U.S. 83% of the Fortune 100 include some social and
environmental information on their Web sites 40% use their Web sites to describe their values and
commitment to CSR 34% use their Web sites to describe environmental
principles 31% include year on year comparison of progress 22% report self-assessment and/or internal audit of
social and environmental performance 7% report independent verification of social and
environmental performance(Source: 1999 study conducted by BSR)
Who in LDCs?
Work is ongoing Asia, South Africa, and South America
Leadership is often from developed country companies working through their supply chains
Methodologies are similar, but at different stages of application
Values interpretations and goals can require different indicators in different local contexts
Challenge: Local application of global codes / values / reporting methods
How To Do It
Sample SEAAR Reporting Cycle
(Graphic Removed)
Things To Remember
Report regularly Use relevant, comparable indicators Involve stakeholders Be humble Employ independent verification Demonstrate use of information in business
planning and performance assessment Follow through on commitments
Indicators, Auditing and Verification
$ CO2 HRs
Financial Environmental Social/Ethical/Economic
1 Unit
1 Definition
Standard Formulae
Standard Exchange Rate Process
Traditional Verification
20-40 Units
20-40 Standard Definitions
Standard Formulae
Standard Instrument Calibrations
Traditional Verification
100s Units
No Standard Definitions
No Formulae
No Calibration
Traditional & Stakeholder verification/assurance
(Courtesy of Mark Wade, Shell International, 1999)
Indicators (Measurement) -- the Challenge
Auditing / Verification -- the Challenge
Methodologies / brands increasing in number and competition
Design and audit roles overlappingLack of comparable indicatorsCosts prohibitiveVerification of multiple types of qualitative
data requires multiple techniques -- audit against checklist one component of SEAAR verification
Conclusions
Identify the Issues on Which to Focus
No single “right” order of issues Each firm’s approach informed by unique profile
– mission, vision, values– compliance - leadership continuum – position in marketplace– core business goals– industry-specific issues– regulatory/public policy environment– advocacy group/media attention– geography
Recognize the scope of the task: a comprehensive, integrated analysis likely to yield best strategy
Recognize the Need for a Comprehensive
Approach Assemble leadership Clarify mission, vision, values and the corporate definition of CSR Assemble a comprehensive picture of current policies and
practices Assess strengths, weaknesses, options for improvement/strategic
linkages Engage internal and external stakeholders Prepare reasonable company response, including benchmarks
and measurable goals Align systems for accountability/recognition/rewards Continue cycle of regular assessment and reporting, even if
reporting is internal only Apply information learned in business decision-making
Getting Started: Sample Test QuestionsAre we a great company making great products? Do our products meet the needs of our customers? Do our products provide a net benefit to society? Do we produce them in an environmentally and
socially responsible manner? Do we conduct our business in an ethical and
transparent manner? Do we seek the opinions of those affected by our
choices and allow them to influence our decision-making?
Are we contributing to a better future?
Select from Types of Standards:
AA1000 & GRIProcess (AA1000)
Process concerns the reflection at all stages of the process over time of the views and needs of all stakeholder groups. Stakeholder views are obtained through an engagement process that allows them to be accurately and fully expressed without fear or restriction.
Measurement (GRI)
To be useful, information must be relevant to the decision-making needs of user-groups… In sustainability reporting the issue of what is or is not relevant may best be gauged through various forms of stakeholder engagement, such as surveys of stakeholder needs
(Courtesy of Simon Zadek, ©1999)
Watch Standards Limitations
Do the standards embed reported policies,
methods, and knowledge?
Do the standards promote a culture of social
learning and innovation?
Are stakeholders able to integrate values and
value through their engagement in the business
process?
Do the standards enhance overall performance?
(Adapted from Simon Zadek, ©1999)
Work at Quality
Seek methodology that is transparent, understandable, replicable, and credible
Develop process rooted in stakeholder engagement, with policies, systems, and performance measurement
Use methods that encourage experimentation and innovation, generate learning and develop new knowledge
Derive tangible, significant outputs and outcomes that are relevant to the organization and stakeholders and achieved in a cost effective manner.
(Adapted from Simon Zadek, 1999)
When Standards Promote Quality, They .
. . Create an effective quality floor Encourage self-determined quality Promotes experimentation and innovation Secures a transparent credible process Stimulates a results-oriented process Enables a cost-effective social accountability
environment Opens links to economic and environmental
process standards, and outcomes.
(Adapted from Simon Zadek, ©1999)
Look for Standards That Are ‘Open’ and
‘Shut’Open Responsive to specific issues and needs Rooted in values and vision Emerge and evolve through dialogue
Shut Standardised, replicable method Easy to adopt, clear quality frame Comparable outcomes
(Adapted from Simon Zadek, ©1999)
“I believe the distinction between a good company and a great one is this: A good company delivers
excellent products and services, and a great company does all that and strives to make the world a better
place.”William Ford, ChairmanFord Motor Company1999 Annual Meeting
More Information
www.accountability.org.uk
www.bsr.org/resourcecenter
www.globalreporting.org