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8/8/2019 Trends in Csr
1/21
TRENDS IN CSR
Lecture in Good Governance
& Responsible CitizenshipJanuary 2009
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Potential benefits of implementing
a CSR approach1. Better anticipation and management of an
ever-expanding spectrum of risk. Effectivelymanaging governance, legal, social,
environmental, economic and other risks canimprove the security of supply and overallmarket stability.
2. Improved reputation management.
Organizations that perform well with regard toCSR can build their reputation, while those thatperform poorly can damage brand andcompany value when exposed.
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Potential benefits3. Enhanced ability to recruit, develop and retain
staff. This can be the direct result of pride in
the companys products & practices, or of
introducing improved HR practices.
4. Improved innovation, competitiveness an
market positioning. Drawing feedback from
stakeholders can be a rich source of ideas for
new products, processes and markets,
resulting in competitive advantages.
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Potential benefits5. Enhanced operational efficiencies and cost
savings. These flow from improved efficienciesidentified thru a systematic approach tomanagement that includes continuous
improvement.6. Improved ability to attract and build effective andefficient supply chain relationships. Largerfirms can stimulate smaller firms with whomthey do business to implement a CSRapproach. (e.g. some apparel retailers requiretheir suppliers to comply with worker codesand standards.
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Potential benefits
7. Enhanced ability to address change. A firmwith its ear to the ground thru regularstakeholder dialogue is in a better position to
anticipate changes & trends.8. More robust social license to operate in the
community. Improved citizen and stakeholderunderstanding of the firm and its objectives
and activities translates into improvedstakeholder relations, which would in turntranslate to enduring public, private and civilsociety alliances.
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Potential benefits
9. Access to capital. When making decisionsabout where to place their money, investorsare looking for indicators of effective CSRmanagement.
10. Improved relations with regulators. In someareas, govts. have expedited approvalprocesses for firms that have undertaken CSRactivities.
11. A catalyst for responsible consumption.Changing unsustainable patterns ofconsumption is seen as an important driver toachieving sustainable development.
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Financial market opinionThere is a growing body of evidence thatcompanies which manage environmental, social
and governance risks most effectively tend todeliver better risk-adjusted financial performancethan their industry peers. Jean Frijns, Chief
Investment Officer, ABP, 2004The consideration of material social &
environmental issues should be a part of everyfinancial analysts normal work. Not only doesthis make sense from an investment risk
perspective; institutional clients are increasinglyasking for better integration in fundmanagement. Thomas Albrecht, Dir. Of Research,Credit Suisse Asset Management, 2004
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KEY TRENDS & ISSUES IN CSR
1. Viewing CSR in a broader and more systemiccontext.
2. The enabling role of government.
3. The relative efficacy of regulatory and
voluntary approaches to CSR issues.4. Exploring the linkages, and often
inconsistencies, between a companys CSR,corporate governance & public policy
positions.5. Developing a more strategic and integrated
value proposition for CSR at the level of thefirm.
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KEY TRENDS AND ISSUES
6. The leadership role of CEOs andBODs.
7. The potential collective CEO action
8. The role of media as watchdog,endorser and multiplier.
9. Measuring the impact &
effectiveness of CSR & partnerships.10.Scaling-up the impact of
partnerships.
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1. Viewing CSR in a broader
and more systemic contextCSR is most usefully understood not merely interms of what individual companies choose to
do, or are able to do, but as a systemic
expression of the broader context andgovernance frameworks in which business
operates, and the various market, public policy,
and stakeholder drivers that shape this context.
(CSR needs to be seen in the context ofGovernment, NGO, and media accountability
and transparency).
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2. Enabling role of government
CSR initiatives reflect voluntary actions done bycompanies to compensate for governance gapsat the local, national, and international level.These gaps may result from inadequate
governance structures and institutions, weak orunderresourced public capacity, lack of politicalwill, bad governance, etc.)
Institutions such as the WB group and Intl.
Business LeadersF
orum are studying the roleof government in creating an enablingenvironment for CSR.
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3. Relative efficacy of regulatory and
voluntary approaches to CSR issues
Public financing and procurement structures aregood examples of initiatives that are voluntary inthat they are not a blanket legal requirement forall enterprises. They are mandatory for any
company wanting to get access to public financeand government contracts.
Another is the integration of social andenvironmental criteria into the membership
requirements of certain business networks,multistakeholder coalitions, and even trade andindustry associations.
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4. Exploring linkages, and inconsistenciesbet. a companys CSR, corporate
governance, and public policy positionsCSR in some companies remains firmly
inside a PR or philanthropy silo, and all too
often sits at odds with positions that the
company takes on its lobbying, political
donations, public policy issues, and other
govt. relations activities.
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5. Developing a more strategic and
integrated value proposition for CSR
at the level of the firmThere is a need to support further empiricalresearch on the causal links between goodethical, social and environmental performance&good financial performance or shareholder
value. There is a need to understand thelinkage bet. CSR & the following corporatevalue drivers:
1. Integrated risk management
2. Intangible assests: innovation, reputation,alliances, and intellectual capital
3. New market or business opportunities orserving underserved or emerging mkts.
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6. Leadership role of CEOs and BODs
The leadership of CEOs and their
willingness to speak out in public or
complex business issues such as
international trade devt. assistance,
poverty, HIV/AIDS, climate change,
human rights, multilateralism, role of UN,
agricultural subsidies, and social andenvironmental impacts of trade policies,
IPR, and new technologies.
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7. Potential of collective CEO
actionCollective business leadership can occur on
a geographic or industry sector basis, or
around specific social, ethical or
environmental challenges, such as
corruption, etc. The CEO-led alliances are
referred to variously as business
leadership coalitions, public purposebusiness coalitions, and CEO leadership
networks.
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8. Role of the financial sector in redefining
risk, opportunity and fiduciary responsibility
The financial sector (includes the institutionalinvestors, stock exchanges, insurers, bankers,and rating agencies) is seen as one of the keypotential game changers in shifting CSR from a
marginal to more mainstream business issue. Ifmandated by govt. regulations, guidelines orincentives, the financial sector could have amajor impact in the coming decade.
Fiduciary - relating to the relationship between atrustee and the person or body for whom thetrustee acts.
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9. Role of media as watchdog,
endorser and multiplier
The media was seen as a key driver inensuring greater corporate accountability serving as public watchdog by
investigating & reporting on examples ofbad corporate behavior, or exposinginconsistencies between corporatestatements and actions. It can also have amultiplier effect on raising publicawareness about CSR issues.
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10. Measuring the impact and
effectiveness of CSR & Partnerships
Performance measurement was seen as
necessary for ensuring greater accountability
and transparency with external stakeholders, as
well as making a sound business case for CSRinternally. One challenge associated with the
drive to develop measures & standards for CSR
is the rapid and confusing growth in different
measurement systems, standards, and codes.
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11. Scaling-up the impact of
partnershipsScaling-up means creating rules that apply tomany organizations.
The most common enablers to change marketsand scale-up beneficial impacts of partnershipsor individual CSR activities:
1. Government actions (govt. incentives,regulatory instruments)
2. Corporate value or supply chains (leads to
greater scale and sustainability for their CSRactivities and partnerships across borders)
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Most common enablers
3. Collective corporate action thru businessleadership coalitions focused on a specificCSR issue, industry sector or geography.
4. Market mechanisms such as social andenvironmental certification and labellingsystems, emissions and environmentaltrading schemes, and stock exchangelisting requirements.
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