csr
DESCRIPTION
CSRTRANSCRIPT
Corporate Social Responsibility and Sustainable Competitiveness
Djordjija Petkoski
Lead Specialist, World Bank
April 2003
World Bank Institute
Overview
I. The World Bank and WBI
II. Setting the stage and the Big Picture
III. Corporate Social Responsibility and Ethics
IV. World Bank Institute
V. Raising CSR IQs
I. The World Bank and WBI
World Bank Group key priorities:•PPoverty Alleviation•GGood Governance•GGood Investment Climate
“The World Bank as a whole has two faces – we are a lending Bank and a
Knowledge Bank, positioned at a major intersection in the knowledge economy, connecting global learning opportunities
with investment assistance for local development. Our role is that of
facilitator, broker, connector, catalyst – WBI is our catalytic agent.”
– James D. Wolfensohn, President,
The World Bank
WBI creates learning opportunities for countries, Bank staff and clients, and
people committed to poverty reduction and sustainable development.
II. Setting the Stage and the Big Picture
Dynamic Change: Rising Risk
• Technology, including the Internet and mass media.
• Globalization – anti-globalization movement.• Stronger civil society.• Lack of trust in corporate America.• Ira Millstein: “A new world of unprecedented
scrutiny.”• Increased importance of CSR and supporting
institutions.• Terrorism.
Beyond the Letter of the Law
• Corporations are vigorously held to account in the court of public opinion.
• Regulatory compliance is no longer enough.• Facing countless gray areas –
1. Net of complex factors2. Standards are continuously shifting.
• At stake is a company’s reputation.
A Risk Grid
• Short-term risk: financial market fluctuations; brand-new technology; loss of key customers or suppliers.
• Long-term risk: demographic shifts; impact of HIV/AIDS and poverty.
• Intrinsic risks: inside the company.• Extrinsic risks: outside the company.___*Blue Ribbon Commission, Fall, 2002
Risk Grid
Loss of competitive
position
Demographic shift and poverty
Employee crimes Terrorism/
terrorist actsShort Term
Long Term
___*Blue Ribbon Commission, Fall, 2002
Intrinsic Extrinsic
Poverty and Developing Countries
Today:
• 3 billion people (survive on) under $2/day
• 1.2 billion people (survive on) under $1/day
Population Growth
2000 2025 2050
Developing Countries
5 billion 7 billion 8 billion
Developed Countries
1 billion 1 billion 1 billion
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)
III. Corporate Social Responsibility and Ethics
Competitiveness
Corporate Governance
Corporate Social
Responsibilities
Business Conduct/Ethics
Leadership and
Values
Importance of Ethics
“The best chance you have of making a big success…is to decide from square one that you are going to do it ethically”
- Alan Greenspan
Chairman, Federal Reserve Board
Importance of Ethics
“There is no such thing as business ethics….There’s just ethics; and we all have to practice them every day in everything we do.”
– Peter Drucker
CSR – A New Paradigm
To think comprehensively and systematically about
• The role of business in development
• The manner in which the business is conducted
• Corporate Governance
• Poverty alleviation
• Corporate contribution to peace and war against terror
• Business, government and civil society partnership- common ground and collective action
Barriers to CSR
A) Corporate Level- Lack of leadership and vision- Too much focus on short-term goals- Inability to recognize opportunities- Lack of entrepreneurial spirit and innovation
Barriers to CSR
B) Country/Society Level – Lack of creative pressure from the government and
civil society.
– Lack of support from the consumers
– Lack of peer support through business associations - reluctance of other companies to follow
– Lack of economic/market incentives
Examples: Why we need Corporate Governance
• Russian Oil Firms
Market Value Estimated Actual Value
Discounted Ratio
Firm A:
$90 mn.
$50 bn. 556 times less
Firm B:
$20 bn.
$600 bn. 30 times less
IV. World Bank Institute
Tools
• Global E-Surveys
• Global E-Conferences
• Web-Based Courses (Global/Country Focus)
• Face-to-Face– High-Profile: Awareness and Consensus– Action Plan
Which of the following factors most affects public impression of individual companies?
E-Survey on Corporate Social Responsibility (US 546 – World 2602)
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
FinancialFactors
Company size BusinessStrategy
Managementquality
Corp.Reputation
Laborpractices
Businessethics
Responsibilityto society
Environ.impact
US World
E-Survey on Corporate Social Responsibility (US 546 – World 2602)
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Pollution Depletion ofresources
War Humanrights abuse
Gaprich/poor
Economicinstability
Violation ofworkers
rights
US World
Which of the following problems affects you, your family and your community the most?
What are the main constraints that make it difficult for companies in your country to address Corporate Governance, Corporate Social Responsibility and Business Ethics issues in a more systematic and
effective way?
E-Survey on Corporate Social Responsibility (US 546 – World 2602)
00.020.040.060.080.1
0.120.140.160.180.2
US World
E-Survey on Corporate Social Responsibility (US 546 – World 2602)
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Yes No I considered doing so
US World
Did you reward or punish companies in the past year based on your perceived social performance?
E-Survey on Corporate Social Responsibility (US 546 – World 2602)
0
0.1
0.2
0.3
0.4
0.5
0.6
International Law Voluntaryimplementation
Public exposure Economicincentives /
penalties
US World
What is your preferred approach to strengthening international safeguards and business conduct codes?
E-Conferences• “Global E-Conference on CSR, Education and
Technology” (Nov. 18 – Dec. 7, 2002)• WBI and the University of Michigan Business School “E-
Conference on Business, Democracy and Peace” (Oct. 7 – Nov. 1, 2002)
• WBI and Ethics Officer Association (EOA) “E-Conference on Business Ethics and Corporate Accountability: The Search for Standards” (Sept. 9 – 27, 2002)
• WBI and Inter-American Development Bank “Americas E-Conference on CSR” (June 10 – July 5, 2002)
• “Future Leaders’ E-Conference on CSR” (March 18 – April 26, 2002)
Web-Based Courses on Corporate Social Responsibility
• 2550 participants/90 countries• Key partners:
1. UN institutions: UNDP, UN Global Compact, UNIDO, UN Staff College
2. Academia: Wharton School of Business, University of Michigan, Higher School of Economics (Moscow)
3. Corporate world4. Civil society
V. Raising CSR IQs
Raising CSR IQs
ZMET/HBS
“The fundamental obstacle to CSR is that we are caged in our current ideas.
This is a picture of a man inside a prison with broken-down technology –
computers, clothes, lamps, and all kinds of things. If we stick with our current
technology, consumption, business model, and decision-making models, this is where we will end up for sure.”
– ZMET interviewee
“Guy going from one side of the canyon to the other… a lot of clouds like fog. The point is
going from one way of doing business to another is very tough. There’s a lot
uncertainty. It takes a lot of skill, but we have to lift ourselves beyond that, above the fog, and that’s not going to be a simple exercise. CSR is about seeing the forest, the fog, and
seeing how we can get on the other side, and how we can be well-equipped for doing that.
So probably we need to develop additional skills, knowledge, and understanding.”
– ZMET interviewee
“We have some kind of salad with a human face… with a smile made with a hot pepper.
So the story is that in all of our implementation challenges, we have to see
that human face, identify with it… on the trees we are cutting down, the fields we are
destroying… ourselves we are hurting. With some kind of creative effort, we can see that. It’s not going to be all sweet. This hot pepper will make our lives unpleasant from time to time. But I think the overall effect will be
positive.”
– ZMET interviewee
“The message is that whatever we do today will have an impact on future generations. It’s
not just my kids or your kids or somebody else’s. It’s future generations. We should not
hope that the walls we build to protect ourselves will be tall enough to protect our
children. Only with very conscious effort we can make the world for them a better place to
live…even if we address our most selfish needs we have to address the needs of the next
generation. That’s what CSR is about.”
– ZMET interviewee
Need for partnerships
• Businesses are discovering social values
• NPOs are discovering business principles A new thinking about partnership: not an exchange but building relationships between business and NPOs. To find ways to make philanthropy serve the community and company’s business objectives.
• The collaboration continuum – Philanthropic (Charitable donor and recipient)– Transactional– Integrative For more details, see : J.E. Austin “The Collaborative Challenge” Jossey Bass Publishers, 2000
Collaboration Continuum
Relation type Philanthropic Transactional Integrative
Level of Engagement
Low High
Importance to Mission
Peripheral Strategic
Magnitude of resources
Small Big
Scope of activities Narrow Broad
Interaction level Infrequent Intensive
Management complexity
Simple Complex
Strategic value Modest Major
From: J.E. Austin, “The Collaborative Challenge”
Creating partnerships
• What are you trying to accomplish through the collaboration?
• Where does your mission overlap with the potential partner’s mission?
• Do you and your potential partner share an interest in a common group of people?
• Do your needs match up with your partner’s capabilities, and vice versa?
• Would the collaboration contribute significantly to your overall strategy?
• Are your values compatible with your prospective partner’s
From: J.E. Austin, “The Collaborative Challenge”
UN Global Compact Course Module
Objective Increase understanding of Global Compact
and main principles- Mission- 9 Principles
Design What action is required from the businesses
to meet the main principles of the Global Compact?- the business benefits to join- what companies need to do to qualify- what do the 9 principles mean to business?Source: UN Global Compact (2003)
Implementation
Global Compact Performance Model to implement the principles
The Global Compact mechanisms for engagement
Learning Forum
Policy Dialogues
Local Networks
Partnership projects
UN Global Compact Course Module
Source: UN Global Compact (2003)
UN Global Compact Partnership
UN Global Compact and WBI are jointly organizing:
1. A Global Compact Module for the web-based course on ‘Corporate Social Responsibility and Sustainable Competitiveness’
2. An E-Conference on ‘The Role Of Business In Fighting HIV/AIDS’, April 21- May 9, 2003
The recommendations will be shared with decision-makers at the ILO and UNAIDS conference in Geneva, May 12-13, 2003
Private Sector Perspective
“Corporate Social Responsibility is not a cosmetic; it must be rooted in our values. It must make a difference to the way we do our business.”
Group Managing Director
“You cannot talk about CSR unless you love your people and your country”
A student from Moscow, in opening remarks for a meeting on Russian Future Leaders and CSR, with Mrs. Wolfensohn.