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ebbf offers an introduction to Corporate Social Responsibility and its role in bringing about more sustainable and successful companies.Starting from highlights of key changes that are taking place in today's fast evolving world we offer responsible solutions that companies are and need to embrace in order to gain a postiive competitive advantage.
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Managing for Sustainability and Corporate Responsibility
MBA at European School of Economics
Spring 2011
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Are we living a period of crisis or of opportunity?
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January 2009 right in the middle of the financial crisis
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“Hope you are doing great in these exciting times”
Charlie O’Malley
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In times of crisis
it is necessary to change
new ideas and new ways of operating are needed
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In times of crisis
it is necessary to change
new ideas and new ways of operating are needed
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What do you think,is there any crisis?
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Crisis = this is not working
We need to find a new direction
but everything is new - there is no map
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http://www.slideshare.net/jbrenman/shift-happens-33834
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Ten years ago there wereno social networks.
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Ten years before that we didn't have the Web.!
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If you work in the web programming, online marketing, or mobile phone industries…
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your job did not exist
twenty years ago.
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Who knows what jobs will existtwenty years from now?
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How do you feel?
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What else is changing?
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New business models
Apple’s Apps
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lower price of hardwareto create a marketplace
Apple’s TV
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Google introduced
FREE software
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Changese.g. cement innovation on
motorway building in mobile places
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Biggest change is in communication
and the way companies
communicate
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I can access - any - information
I can access it - anywhere -
I can write and influence - the world -
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the changing perceptions of PEOPLE
http://www.bbc.co.uk/news/business-13123576
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the changing perceptions of PEOPLE
http://www.bbc.co.uk/news/business-13123576
"The green agenda is increasing in its importance with the general public. If companies can be ahead of the curve in embracing this
agenda, then it seems to me it's of economic benefit."
It is partly about reputation - something hugely important to the world's big accountancy and auditing companies. But it is
also about the companies' ability to attract the best staff.
"You have to remember that 70% of our staff are under 35," says Jon Barnes, who manages PwC's buildings across the UK.
"That clearly means they are in an era that really does care about the environment. They really want to see substantial
savings in our carbon footprint."
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the changing perceptions of PEOPLE
http://www.bbc.co.uk/news/business-13123576
"You could sit there and be cynical and say this is only being done for reputational advantage, but at the same time this is a means to an end - from an environmental agenda, things are getting better. Regardless of the motivation, the environment is damaged less."
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.... so, WHAT is changing?
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What else is changing? The environment
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Problems are global
The solutions offered today are local / national
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“The earth is but one country and mankind its citizens”
Baha’u’llah www.ebbf.org
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Considering current consumption levels:
Reserves of convential oil will last 40 years, gas 60 years and carbon 165-285 years.
Uranium 30-60 years Hafnium, Indium (chips, LCDs) 5-15 years
Copper (wire, coins, pipes) 40-60 years
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Energy Supply
Quantity
Time
With current rates of consumption
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• Demand for energy will grow 50% by 2030
• 45% in India and China
• Carbon demand will grow 73% (mainly India and China)
• C02 emissions will grow by 57%(2/3 from US, China, India, Russia)
IEA/OECD World Energy Outlook 2007
Demand for Energy
Supply of Energy
Quantity
Time
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Demand for Energy
Supply of Energy
Quantity
Time
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Demand for Energy
Supply of Energy
Quantity
Time
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Increase in temperatures in last 50 years
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Past and future CO2 concentration
20-35% will stay in the atmosphere for many centuries
deforestation 1.5 Gt/year, 15% of total anthropogenic emissions
Lo que dicen los modelosIPCC 2007
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Reduction in Arctic Ice CapSeptember 1982 and 2008
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Growth of world populationTripled in - one - generation
Not enough resources nor food for the this size population
Improvements in productivity in last 20 years from 1.8 a 2.5 t/ha. -
HOW?
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high energy consumption, high use of fertilizers ...
Soil degradation
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price increases
http://www.bbc.co.uk/news/business-13086979
price increasesPrice increasein 2007 price of wheat 100% increase, maize 50%, rice 20%, food price increase 10%in the mid 2008 price of food increased to 78%, soy and rice 130%
Competition for energybio-energy = 800 m drivers competing with 2 bn poorest
Buying other peoples’ landsRich countries and companies buying / renting land in foreign countries:South Korea 690,000ha and UAE and Egypt 400,000ha each in Sudan; Saudi Arabia 500,000ha in Tanzania; Daewoo 1.3m ha in Madagascar; Libya 100,000ha in Mali; South African businesses 8m ha in DR Congo; China 2.8m ha in Congo and 2m ha in Zambia, with 1 m Chinese farm labourers in Africa in 2009.
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“Hope you are doing great in these exciting times”
Charlie O’Malley
The sustainability of the planet requires a new mindset
You are the protagonists of the greatest transformation that ever took place in the history of the earth
Change is inevitable, and the speed of change is accelerating, requiring much more adaptive and intuitive people
Global governance institutions need to develop accordingly
We can actively work to help achieve the change that we wish to see happen or wait for a catastrophe that will force us to change
Creativity and innovation, together with new values and a new ethic that highlights our role in serving the development of the global world community
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this is THE age where you can make anything happen
overturning decades-old dictatorships ... in days
done by the majority of the population: Generation Y
ambitious yet peaceful
with a new mindset of unity of purpose respecting diversity
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We operate in a constantly evolving scenario
To remain competitive, organizations need to adapt in a timely manner
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Definition 1: European Commission
“a concept whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”
Definition 1: European Commission
“a concept whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”
What is Corporate Social Responsibility - CSR
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Definition 1: European Commission
“a concept whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”
Definition 2: World Business Council for Sustainable Development
“the continuing commitment by business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and their families as well as of the local community
and society at large.”
What is Corporate Social Responsibility - CSR
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We operate in a constantly evolving scenario
To remain competitive, organizations need to adapt in a timely manner
Companies are made of people, so they will only change if their people are able to adapt
and change with the evolving scenario
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EnterpriseEnterpriseEnterprise
Sh
are
ho
lders
EmployeesCustomers
EnvironmentC
om
mu
nit
iesSuppliers
Enterprise eco system: The stakeholder concept
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PICK A STAKEHOLDER
EnterpriseEnterpriseEnterprise
Sh
are
ho
lders
EmployeesCustomers
EnvironmentC
om
mu
nit
iesSuppliers
and be socially responsible
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http://www.greenpeace.org/international/campaigns/toxics/electronics/how-the-companies-line-up/
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http://www.greenpeace.org/apple/
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How did that affect stakeholders?
EnterpriseEnterpriseEnterprise
Sh
are
ho
lders
EmployeesCustomers
EnvironmentC
om
mu
nit
iesSuppliers
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There is crisis
There is opportunity for change
There is opportunity to build “our” company
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"...a global enterprise that allows individuals to their double objective
Bahá'í International Community’s Contribution to the 18th Session of the United Nations Commission on Sustainable Development - 2010
fully develop their potentialities
and contribute to improving the wider community”
Visions and broader Objectives
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Wikipedia’s 13 million articles are all written and maintained by the crowd.
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“Don’t just look to become more active, start to think more holistically on how your company participates as a global citizen. This doesn’t just come about through one or two projects – it is a mindset.”
Starbucks former Senior Vice President of Corporate Social Responsibility, Sandra E. Taylor
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avenues for success
CompetitiveSuccess
EconomicSuccess
Social Success
Strategy
Monitoring, Evaluation
LON
G T
ERM
SU
CC
ESS
FAC
TOR
S
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social successLegislation ISOSarbey Oxley EU Modernization Directive ILO
Development of productionEco DesignEco EfficiencyPartnerships and sharing of information / innovation
. Monitoring supply chain
. Dialogue with stakeholders
. Ability to respond to stakeholder request in critical situations. Spreading a culture of responsible business
FTSE4GoodDJ sustainability IndexNGOMedia CoverageBrand
Risk
Repu
tatio
n
Compli
ance
Innovation
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avenues for success
CompetitiveSuccess
EconomicSuccess
Social Success
Strategy
Monitoring, Evaluation
LON
G T
ERM
SU
CC
ESS
FAC
TOR
S
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Financial Results
Intellectual Capital
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Intellectual Capital
Intellectual capital is the stock of internal knowledge (competencies, skills, capacities etc.)
and the external (reputation, brand, customer satisfaction, etc.)
of an organization, that allows it to transform human and material resources into a system that is able to create value for stakeholders by reaching sustainable competitive advantages
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risk management
The growth of intangible assets
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Corporate image can be created but reputation has to be earned
Corporate image Reputation (ability to respect promises)
The brandVehicle of Promises
Should be one of the main items of corporate
governance
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Fundamental shiftcommunication
trust in adstrust in our friends’ opinions
word of mouthtransparency
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Another Shift
From explainingto
making you feel
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BMWno car appears
only “intangible” feelingsthat need to be accomplished
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But “excitement” is short livedand unless you deliver on that
promise you will be out of business
soon
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But “excitement” is short livedand unless you deliver on that
promise you will be out of businessvery soon
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What is importantfor stakeholders?
For people?
www.ebbf.orghttp://www.youtube.com/watch?v=XJh2LLoNLzw
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Portrait of Gen Y (Offsprings of baby boomers 20 to 35)
Ambition84% profess to be very ambitious
Loyalty vs. Quest45% expect to work for their current employer for their entire career
Multicultural Ease78% are comfortable working with people from different ethnicities and cultures
Healing the Planet86% say it’s important that their work make a positive impact on the world
Networking by Nature48% say having a network of friends at work is very important
What is important for us?
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avenues for success
CompetitiveSuccess
EconomicSuccess
Social Success
Strategy
Monitoring, Evaluation
LON
G T
ERM
SU
CC
ESS
FAC
TOR
S
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governance accountability
Annualized stock market return
The “100 Best Companies to work for” show far better results than the S&P average
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The long term success of a company depends on the competitive, economic success and:
. If it is socially responsible - able to satisfy the legitimate expectations of stakeholders
. If it is able to adapt to the “cultural” change of the external environment
. If it uses at its best its own intangible assets
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Change is happening fast
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its driving values have not taken us very far
causing mainly crisis
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We therefore need a vision of the future, not only of the future we want to avoid but the future we want to create.
What did Martin Luther King say?
I have a nightmare!
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We need a vision of the future, not only of the future we want to avoid but the future we want to create.
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I have a plan
Additional Materials
Employees / Workplace
Quality of lifeHuman resource policies "
Responsible restructuringHuman rightsDiversityJob creationTraining and educationHealth and wellnessHarassment
Customers/consumers
Ethical marketing Products and Services Customer service Responsible procurement Audits Cause related marketing
Suppliers
Codes of conductSupply chain management and monitoringHuman rightsLabour standards (ILO)Minority VendingFair Trade
Community Involvement
Volunteerism Education Poverty alleviation Philanthropy
Environment
Life-cycle management Greening the supply chain Pollution Public procurement Eco-Efficiency (recycling, consumption, ..)
Examples:
Wal-Mart: increase fuel efficiency of trucks by 25% over 3 years (eco-efficiency)
Wal-Mart: audit supplier factories and reward them for environmental goals and cut emissions (responsible procurement)
Danone: closing factory in Mexico without layoffs or job loss (responsible restructuring)
Starbucks UK: employees volunteering on Christmas Day to support local homeless shelter; raising money for local causes (community involvement)
THE BUSINESS CASE FOR Corporate Responsibility
• Hundreds of studies and articles indicate a correlation between good social and environmental practices and financial results, e.g.:
• CR vs share price performance• Good HR practices vs ROI• Low pollution vs PE ratios• Quality vs market share• Community involvement vs employee motivation
• Hundreds of studies and articles indicate a correlation between good social and environmental practices and financial results, e.g.:
• CR vs share price performance• Good HR practices vs ROI• Low pollution vs PE ratios• Quality vs market share• Community involvement vs employee motivation
THE BUSINESS CASE FOR Corporate Responsibility
LOOKING AHEAD
• CR will become more common practice.
• Public expectations of business will increase as the government role continues to diminish.
• There will be increasing demands for more transparency: “don’t tell me, show me”.
• Audits and annual social reports will become common, even mandatory in some countries
• CR will become a more strategic concern for management and be decentralized to business units
• New scandals involving business and government officials will focus increased attention on business ethics.
• New models will emerge for allocation of costs and benefits among companies, customers, and society.
• Raw material shortages and environmental degradation will limit growth and job creation.
• Treatment of employees will become even more important to win the “war for talent.”
• Business will seek more partnerships with government and NGOs to address major issues.
