PowerPoint-presentation

The Development of CSR (Corporate Social Responsibility)

Bengt E. JohanssonFormer Swedish CSR AmbassadorSHU MBA in Shanghai and SuzhouDecember 2015Plan for CSR course

Lectures in Shanghai and Suzhou December 2015One group work every day incl. 10 minutes group discussion and notes to be discussed.Students will write report on CSR work in their own or foreign companies of at least 500 words. Deadline 10 Jan 2016Continued seminar in Shanghai 27 Feb 2016Discussion of individual reports on Feb 276. Seminar on Feb 28 with foreign CEOs

2ThemesCSR definition. Is philanthropy CSR?Use of ranking lists. Worldwide comparisonsCSR reporting systems and toolsHave companies responsibility for HR?Do companies respect labour and social rules?Gender and diversity issuesEnvironmental impactSupply chain issuesAnti-corruptionCSR in ChinaTrends

Abbreviations usedBSRBSCIEUGRIILOMOFCOMOECDSASACSDGsUNDPUNGCUNGPUNICEF1. Definitions

The responsibilities of companies for their impact on societyfrom EU Commission

Which are the CSR issues?Business and human rights Social/labour rightsEnvironment Anti-corruptionfrom UN Global Compact www.unglobalcompact.com

Main international frameworkOECD Guidelines for Multinational Companies

Here I mention several definitions of CSR First the very wide definition now used by the European Union Secondly a more precise definition into four pillars that is used by the UN Global Compact, which is a leading world body on CSR, thirdly a reference to the recommendations of the OECD which is a common reference material in all developed countries and is being marketed in many other emerging countries

510 principles of UN Global CompactHuman Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights Principle 2: make sure that they are not complicit in human rights abuses.

Labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. CSR vs. philanthropyEuropean versus US viewIt is not the question what you do with your profit but how you earned it

CSR in industrial countries versus developing countriesDo companies have to perform duties in developing countries that are taken care of by the state in our countries?

Countries have different policies on tax deductions for philanthropy.One dividing line in the world is how we look at philanthropy. Do companies, and their owners, have a duty to contribute to matters in the community which is outside their commercial activity. The issue lead to a large number of other issues, such as if CSR is a voluntary program, if the state has an obligation to answer for education, health care etc., so it would require several hours of discussion and we would still not agree among us. Therefore I have only indicated the main fault line between the dominant view in Europe and the dominant view in the US. We know that the US view is shared among many companies in Asia.7CSR is not about abiding to the law but doing something over and above the lawLAWLAWTRUSTWill CSR work terminate if all issues are included in legislation?CSRUnsolvedproblemsThere is a great debate about CSR in relation to legislation. Certainly from many circles we hear that legislation is the only effective way to bring change. Our trade unions often tell us that they have more trust in legislation from parliament than from policies from companies even if they by law have a seat on all boards of companies with more than 25 employees!Our law book is already over 2000 pages of fine print. How many more laws can we enact. My government tries to limit legislation that causes puts burden on companies.You might have heard that Sweden was the first country that outlawed corporal punishment of children in homes and at schools (1975) and we were the first country to outlaw sex purchase in 1999. Still we hesitate to introduce new laws to companies. What we hope is to change norms in society so that companies change behaviour based on trust not on laws. that is we try to move the upper line upwards8High trust society

vs.Low trust society2. Use of ranking listsMost credible source NGOsLeast credible source governments, mediaMost quoted ranking lists are:Dow Jones Sustainability Index, DJSI Robecco SAMGlobal 100 Corporate KnightsFTSE4Good Financial Times Stock ExchangeWhen we compare CSR development we often end up looking at ranking lists. This has positive and negative aspects. The good is that we can highlight good achievements, see role models and refine the way we measure and quantify.The negative aspect is that companies learn how to answer inquiries without doing the proper job. The system underpins green washing and tends to put the CSR portfolio to the domain of the communication manager in the company.Here I have made some general comments and quoted the three most widely used ranking lists. I will take a special look at the Dow Jones Index as it covers so many companies that a statistical comparison becomes meaningful.

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Dow Jones/Robecco SAM Sustainable Yearbook 2015This is the world according to the Dow Jones Sustainability Index which is produced by a well known research company Robecco SAM. They have indicated how many companies in each country that are listed in their Yearbook (marked green) and how many are of Gold Class. As the figures are difficult to read I have summed them up per economic region - North America, Europe and East Asia

15 in Europe 18 in the rest of the world11

Distribution Americas - Europe - East Asia Source Robecco SAM 2014, Fortune 2015

If we first look at the two classes that Dow Jones/Robecco SAM has identified we can see that the number of CSR world class companies in Europe is roughly the same as North America and East Asia together. If it is so because of the sheer number of large companies, we have to check that against available statistics and I have on the right side given the number of Global Fortune 500 companies.Here you see that Europe has around one third, but less than the number of companies in East Asia.

12Robeco SAM Sustainability YearbookCountryLeaders 2014PopulationLeaders/popSwitzerland1472,0Finland1052,0Australia25201,3Netherlands16161,0Norway551,0UK52600,9Sweden790,8South Korea 38490,8Denmark350,6France35630,6Canada17330,5Spain20460,4Portugal4100,4Belgien4100,4Japan391260,3Germany25820,3Taiwan8270,3USA793140,3Italy15600,3South Africa9430,2Colombia8440,2CountryLeaders2015Gold201420152014USA7976109UK525047Japan393955South Korea 383687France353455Germany252784Australia252054Spain202011Canada171732Netherlands161624Italy151334Switzerland141644Brazil121211Finland10911South Africa961Sweden71011Taiwan8833Colombia881Thailand52Norway54Portugal4411Belgien4311Denmark331India4613. CSR reportingGlobal Compact CoP-Communication on ProgressGlobal Reporting Initiative GRI version 4ISO 26 000 self reporting, not certifiableEU decision 2014 (public interest entities >500 employees)

How to find sustainability reports of companiesCoP Look under What is Global Compact and then See who is involved Write company name in search field after Our ParticipantsGRI Go to USEFUL PAGES and chose Disclosure Database Type company name and search, if need with limitations3. CSR networksMajor CSR networksUN Global Compact www.unglobalcompact.comBSCI - Business Social Compliance InitiativeBSR Business for a better worldCSR Europe, CSR Asia, ASEAN CSR Network, Arabia CSR etc.Many low carbon business networks

UN Global Compact business signatories (companies + SMEs) 2014-15CountrySept 2014Nov 2015Spain12552068France8901678Mexico336768Braziln.a.681USA308637China226476Colombian.a.470Japan211424Germany255420UK229400Denmark259377Argentina168372Turkey129306India150294Myanmarn.a.267Italyn.a.261Sweden164246South Korea159241Indonesia41135Australia75133Norway85133Sept 2014Nov 2015Philippinesn.a.131Poland55128Switzerland74125Kenya59120Ukrainen.a.120Iraq113118Netherlands90118Pakistann.a.119Canada54116UAE47100Egypt41107Singaporen.a.98Lithuania5491South Africa5481Belgium4077Russia3464Vietnam1763Austria3758Tunisia1955Bangladesh2352Serbia2737World total153834. Business and human rights

This is one of the most important documents in the CSR Area, the UN Guiding principles on business and human rights.In Europe we have a coordinated work to develop national action plans. So far 5 countries have adopted National Action Plans and another 5 are under way. I have not seen any country outside Europe adopt a national action plan. This is a problem as the issue is universal and you can really not take effective measures without having a coordinated government policy. The national action plan is the instrument to develop this.The difficult thing for companies has been how to report on human rights and therefore a reporting model has been developed and it was launched in February this year. The model is now available to all everyone and can be found on www.ungpreporting.org

195. Labour and social issuesThe International Labour Organisation, ILO, in Geneva (www.ilo.org) has 189 conventions of which8 fundamental conventions and 4 priority conventionsChina has ratified 25 conventions of which 4 fundamental (C 100, 111, 138, 182), 2 priorityMember states give every 2nd year report on fundamental conv., otherwise every 4-5 yearAt working session each year reports are studied and commented onSweden has ratified 93 conventions, 8 of 8 fundamentals and 4 of 4 priority6. Gender and diversityRight to workEqual pay for equal jobEqual representation at all levelsEquality in labour market in EuropeEuropean Institute of Gender Equality (EIGE) www.eigi.europa.euProposed by Sweden 1999, decided on by EU institutions 2004, opened in Vilnius, Lithuania in 2010Best statistics of gender issues in Europe, see slides on Gender equality indexDifferent result if you search on gender gap for work, education, economy, health, power

The leading country is following pages marked with colour

Gender issues in Europe todayRepresentation of women in management positions (EU Parliament law in November 2013 indicating 40% minimum in boards)Sharp divisions among parties, countriesIn Swedens cabinet 50-50 since 199145-55 in the Swedish parliament 2012Equal pay for same job will be realized only 2138 (if present trend continues)

Development of female/male labour participation in Sweden 1970-2011

Full time20-34 h/w1-19 h/wUnemplNot inlabor market7. Environmental impactCompanies have big environmental responsibilityGRI 4 requires the following reportsInput energy, waterOutput emissions effluents, wasteTransportationEnergy intensityShare of renewablesCarbon Disclosure Project,Construction standards LEED, BREAMSWCD World Commission on Dams, from year 2000Risk managementInput risk (Availability, quality, cost of raw material and inputs)Physical risk (Risk of security and of access to a companys own operations and assets)Market risk (Risk there will be a change in demand; product demand as well as effectiveness of marketing messaging)Stakeholder risk (Risk of failing to deliver against expectations from stakeholders)Regulatory risk (Risk och changing regulations)

8. Supply chain issuesAny limit for responsibility in supply chain?Priority issues:- Existence of child labour- Conflict minerals (Dodd Frank law in US; EU directive out 2015)- Hazardous chemicals (REACH in EU; Registration, Evaluation, Authorisation and restriction of Chemicals)- Waste from production - Fraud and corruption9. Anti-corruption1: Transparency International. www.transparency.orgInternational NGO founded in 1993. Yearly ranking lists published in December every year. China rankted 100/175 in 2014.

2: OECD convention against briberyAdopted 1999. 34 OECD members + 6 countries

3. UNCAC. UN Convention Against Corruption. Entered into force 2005

4: Business Anti-Corruption Portalwww.business-anti-corruption.com Launched in 2007Anticorruption is like human rights. Nobody likes corruption or infringements against human rights. The question is what we do about it. Here are four initiatives that are at the forefront and we are happy to see a strong European presence.

33The world by Transparency International

Chinese version, first page

10. CSR in ChinaMain characteristics

Compliance with government policiesForeign companies initiativesInternational buyers with CSR requirementEnergy, banking, automotive, consumer productsSASAC guidelines 2008 Stock exchange regulations on reportingFrom Go Global to One Belt, One RoadIn October 2013 a study was published on sustainability aspects of One Belt, One Road; 2015 Report on the Sustainable Development of Chinese Enterprises Overseas The report can be downloaded from www.cn.undp.org

Several recommendations to Chinese companies, private as well as SOEs on how they should build-in CSR work in their business models were given.

http://www.cn.undp.org/

4 stages of CSR development1985-1999 The CSR origins in ChinaLate 90s-2005 The CSR debate in China2006-2011 The CSR consensus in China -First Year of CSR in China (2006)2012 The CSR management in China -First year of CSR management in China (2012)

Five-in-one for Joint Promotion means that government, sector, enterprise, society and international cooperation have formed five forces in promoting CSR development.

Main government institutionsSASAC Promote CSR management of SOEsMOFCOM Promote Chinese international contractors to perform social responsibility abroad MIIT Promote CSR pilots and CSR in information technology industryMEP Promote corporations to engage in biodiversity SAC Promote the standardization of CSRCNCA Promote certification institutes to release social responsibility reportLocal government initiativesAreaContentsShanghaiJuly 2007 Guidelines of Pudong New Area on Corporate Social ResponsibilityZhejiangJuly 2012 Opinions on Promoting CSR in Industrial Enterprises in ZhejiangShaanxiDecember 2009 Guide on Social Responsibility for Industrial Enterprises in Shaanxi ProvinceChongqingJanuary 2012 Evaluation Methods on CSR Implementation of Key Enterprises in Electronic Information IndustryFive provinces:July 2012 Annual CSR Reporting System for Enterprises in Phosphate Mining Industry (Hubei, Hunan, Sichuan, Guizhou, and Yunnan)Sector propelled initiativesAssociationsGuidesChina National Textile And Apparel Council (CNTAC)CSC9000T CSR Management SystemCSC9000T Implementation Guidance, Outline of CSR Report for Chinas Textile and Apparel Enterprises China Federation Of Industrial Economics (CFIE)China Industrial Enterprise and Industrial Associations Social Responsibility Guidelines, Implementation Manual on China Industrial Enterprise Social Responsibility Guidelines, Implementation Manual on Industrial Associations Social Responsibility Guidelines China Electronics Standardization AssociationGuidance on Social Responsibility for China Electronic and Information IndustryChina International Contractors Association (CHINCA)Guide on Social Responsibility for Chinese International Contractors (CSR Guide)CCCMCCCCMC Guideline for Social Responsibility in Chinese Outbound Mining Investment (China Chamber of Commerce for Metals, Minerals and Chemicals Importers & Exporters)Foreign companies China CSR reports

Inter-governmental CSR international cooperation project Sino-German Corporate Social Responsibility Project (2007.4-2014.6) Sino-Sweden Corporate Social Responsibility Project (2007.6- present) see www.csr.mofcom.gov.cn or www.csr2.mofcom.gov.cn for English Sino-Dutch Corporate Social Responsibility Project (2008-2014)

5. International cooperationPresent: Five-in-one State of CSR Development in ChinaCopy Right Reserved by China WTO Tribune4711. TrendsMulti-stakeholder consultationsConsumer and media focusOwners/shareholders responsibilitiesBusiness & human rightsNext frontier: SMEs and developing countriesGovernment role is not decreasingThank you!Contact details:

johansson_bengt@hotmail.comTwitter: @bengtjohansso15www.newcontext.se