The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda

The Business Case for CESR: the Thai Experience

Ms. Jiranya RatchindaManager, Strategic Corporate Citizenship, Kenan Institute Asia

Chaiyod Bunyagidj, Ph.D.Vice President, Thailand Environment Institute

June 20, 2006Four Seasons Hotel, Bangkok

OUTLINE

Introduction to CSR

4 Case Studies:• The Bangchak Petroleum Public Company Limited• Electricity Generating Public Company Limited• Pranda Jewelry Public Company Limited• Somboon Group

Q&A

2003Edited by Ryoichi YAMAMOTO (DIAMOND Co. )

Per Per second !!!second !!!

• 390,000 cubic meters of CO2 are emitted,

• 1,629 cubic meters of glaciers in Greenland melt,

• 710 tons of oxygen are decreasing from the atmosphere,

• 2,300 square meters of arable land disappear,

• 3 cattle, 7 pigs and 1,100 chickens are consumed,

the meat production sums up to 6.9 tons,

2003Edited by Ryoichi YAMAMOTO (DIAMOND Co. )

Per Per second !!!second !!!

• 5100, square meters of natural forest disappear

• 13 42. motorcars, . television are produced

• 532peoples go to MacDonald and consume more than

500 hamburgers,

• 24population increases by . persons

ddddd (2 0 0 ,0 0 0 ) ,

(Cont.(Cont.))

Annual Expenditure On Luxury Items Compared With Annual Expenditure On Luxury Items Compared With

Funding Needed To Meet Selected Basic NeedsFunding Needed To Meet Selected Basic Needs

P PPPPPPP PPPPPP PPPPPP PPPPPP Social or Social or Additional Annual Additional Annual

VolumeVolume Investment Needed to Achieve Goal Investment Needed to Achieve Goal

Makeup 18$ billion Reproductive 12$ billion

dddddd dddd ddd ddd d dd dd

ddd dddd dd 17$ billion Elimination of 19$ billion

Europe and hunger and

United States malnutrition

Perfumes 15$ billion Universal literacy 5$ billion

Ocean cruises 14$ billion ddddd dddddddd 10$ billion

water for all

ddd ddddd dd 11$ billion Immunizing every 13$ . billion

Europe child

CSRCSR Definitions: ConceptDefinitions: Concept

• World Business Council for Sustainable Development (WBCSD)

“The continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the workforce and their families as well as of the local community and society.”

CorporateGovernance

& Ethics

People

ContributionTo Development

Environment

Corp

ora

te C

itiz

ensh

ip

Corporate Citizenship

Corp

orate

Citize

nsh

ip

CorporateGovernance

& Ethics

Local and global environmental Quality; Cleaner production processes; Eco-efficiency;Environmental Technology

Product & worker safetyLabor standardsHuman rightsEqual opportunity and access

Corporate Values and Purpose; Transparency; Accountability; Tackling corruption

Enterprise development;Community Investment;Education;Health/HIV/AIDS;Overcoming Digital Divide

ScopeScope

Developed by Suthisak Kraisornsuthasinee, Ph.D.Assistant Professor, Thammasat University

The Dawn of the CSR EraThe Dawn of the CSR Era

“85% of 140 Chief Executives of U.S. based MNCs believe that sustainable development will be even more important to their business model in five years than it is today.”Recent Survey administered byRecent Survey administered by

PricewaterhouseCoopersPricewaterhouseCoopers

Drivers of CSRDrivers of CSR

Shrinking role of government Demands for greater disclosure Increased customer interest Growing investor pressure Competitive labor markets Suppliers relations

Benefits of CSR…Benefits of CSR…

Increased sales and market share. Strengthened brand positioning. Enhanced corporate image and clout. Increased ability to attract, motivate,

and retain employees. Decreased operating costs. Increased appeal to investors and

financial analysts.

……and Challengesand Challenges

Choosing a social issue. Selecting an initiative to address the issue. Developing and implementing program plans. Evaluation and Reporting.

THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED

A member of the Thailand Business Council

for Sustainable Development


BACKGROUND

ESTABLISHED:

VOLUME:

STAFF:

1984

757 (as of December 2005)

80,000 mil. Baht


SCOPE OF BUSINESS

Refined oil sales

Oil refinery management;capacity of 120,000 barrels per day

Consumer goods retail

Integrated petroleum company (production and marketing)

>>

Bangchak Goal:

To be a company that helps develop a better quality of life for all Thais

The company recognizes itself as a large petroleum operation - safeguarding environment and societyis a priority consideration.


RATIONALE FOR CESR


BANGCHAK CULTURE

The sustainable development of business, the environment and society.


Environmental Focus

• Green products: Gasohol, Bio-Diesel• Environmental Management Accounting

CESR HIGHLIGHTED PROGRAMS


• Bangchak community gas stations• Community enterprises

Socio-economic Development

>>



LESSONS LEARNED

Barriers

- Development of organizational culture

Countermeasures

- Management commitment and support.

Key Success Factors

- Management’s leadership- Organizational culture

10

86

420

200520042003u

nit

(m

il. B

aht)

year

Budget for Social Activities


AWARDS & RECOGNITIONS

o Board of the Year Award for Exemplary Practices - 2004/ 2005

o Best Corporate Governance Report Award – 2005

o Most Creative Issue Award - 2004

o TIS 18001-1999 and OHSAS 18001-1999 Occupational Health and Safety Management System

o ISO 14001-Petroleum Refining Certification, 1997


FUTURE CESR ACTIVITIES

Coordinating community networks

Expand business opportunities for communities

THE ELECTRICITY GENERATINGPUBLIC COMPANY LIMITED

A member of the Thailand Business Council

for Sustainable Development

ESTABLISHED

VOLUME

STAFF

1992

107 (as of December 2005)

16,000 mil. Baht

THE ELECTRICITY GENERATING PUBLIC COMPANY LIMITED

BACKGROUND

Produce electricity and supply to EGAT under long-term power purchase agreement.


SCOPE OF BUSINESS

Corporate belief that success is intimately linked with the qualitative growth of Thai society

Vision and policies designed to support activities

Corporate contributions to society and communities in which they operate


RATIONALE FOR CESR

Alleviating environmental impacts and undertaking review and evaluation of performance;

Encouraging employee responsibility for a clean environment;

Communicating with the public and sharing experience with other agencies on industrial performance, knowledge and operating practices.


POLICY STATEMENT ON CSR



Green Energy

Implementation of ISO 14001

Promotion of Alternative Energy

Energy Efficient Building Program

Environmental Focus

Education

- Green library

- Learning facilities and equipment for schools



Social Development

- EGCO’s Group Environment Conservation Camp - Thai Forest Conservation Youth Camp

Youth


LESSONS LEARNED

Barriers

- Lack of employee support

Countermeasures

-Raise awareness of employees -Participation as indicator for performance appraisal- Recognition of employee contribution to society and environment.

Key Success Factors

- Top-down (Board’s & Company’s Policy)- Achievement Incentives - Availability of Budget



Best Corporate Governance Report Award

Top ten listed company in terms of Good Corporate Governance

2001 Best Practices On Corporate Governance

The Good -Very Good Corporate Governance Company

Thailand Energy Awards for "Energy Efficient Building

Natural Resource Conservation Award

Continue implementation of projects; and

Expand activities to new plant sites

Plans for New projects

Sustainable approach to prevent flashfloods and landslides

Environmental program at Nam Theun II project in Lao PDR

Green Classrooms



PRANDA JEWELRYPUBLIC COMPANY LIMITED

PRANDA JEWELRY PUBLIC COMPANY LIMITED

BACKGROUND

Established in 1973 as a jewelry exporter

Started production base 11 years later

Listed company on the Stock Exchange of Thailand in 1990

Operates 5 factories in 4 countries – Vietnam, Indonesia, China and Thailand

Signed the Global Compact Emphasis on Human Rights, Labor Standards and Environment

Volume: 4,000,000 pieces of jewelry each year

Staff: 3,500


SCOPE OF BUSINESS

Pranda Group of companies comprises of:

9 affiliated companies 2 Joint Ventures

Engages in design, manufacturing, domestic and export markets and retail.


RATIONALE FOR CESR

Issues related to business Employee retention is key to business

success Require employee honesty and sense of

ownership

CEO’s Vision

Vision: Caring for employee benefit and welfare Sharing wellbeing with stakeholders


POLICY

Employee Policy:

Treat all employees equally and fairly with proper remuneration under a pleasant and safe working environment.

Society and Environment Policy:

Take responsibility for community environment through participation in activities and events; and strictly comply with related rules and regulations.



Employees’ standard of living

Recognize value of personnel.

Emphasis on staff satisfaction (income, security, welfare and

career path).

Create environment for employee participation



Bilateral Education Project

Cooperation with Kanchanapisek Royal Goldsmith College-2000

Strategically link community program with core business Curriculum for Vocational Level Diploma and Higher Vocational

Level Diploma Budget allocation (from year 2000-2006) ~ 31 Million Baht Scholarships No. of students: 123 graduated,

302 currently studying


LESSONS LEARNED

Key Success Factors

Skilled labor in design and manufacturing Employees’ honesty and efficiency

Cost and Benefits

Enhanced employee morale Build skilled labor for jewelry industry Market access (International Labor Standards) Brand Value and Reputation Community involvement with underprivileged youth


AWARDS & RECOGNITION

2004: Best Exporter

1999: Thailand’s Brand

1998: Best Marketing of New Gold Product and Best Gold Visual Merchandising in Asia Pacific

1996: Best Own Design Exporter

1995: Best Exporter



Strategic focus on Human Resource Development and Welfare

Link communities’ needs with company’s core business

Continue philanthropic and social programs

BACKGROUND

SOMBOON GROUP

Established over 60 years ago as a automobile parts distributor

Expanded to automobile parts manufacturing

In 1996 received technological know-how from Japanese partners

Listed on the Stock Exchange of Thailand in 2005

Obtained QS 9000 and ISO 140001 certification

SCOPE OF BUSINESS

SOMBOON GROUP

Somboon Group of company has 1700+ staff.

The group consists of 3 companies located in the same area.

1. Somboon Advance Technology Public Company Limited (SAT)

2. Somboon Malleable Iron Industrial Company Limited (SBM)

3. Bangkok Spring Industrial Company Limited (BSK)

RATIONALE FOR CESR

SOMBOON GROUP

Vision:

To be an employer of choice by improving quality of life for employees and their families. The company strives to be a neighbor of choice for surrounding communities by expanding activities to cover communities’ social and environmental aspects.

Issue related to business:

As the company is a heavy industrial plant, it is inevitable that there are environmental impacts. The company focuses its CESR programs on reducing air, sound and chemical pollutions in and around the surrounding communities

POLICY STATEMENT ON CSR

SOMBOON GROUP

2003-2007 Corporate Mission:

“To be an important part in Supply Chain to satisfy customers, and encourage employees to be environmentally and socially responsible.”

Employee Policy:

“The company intends to improve employees’ standard of living, including their morale and physical and

mental health, by paying suitable wages; and engage them in the company’s community programs to

enhance their awareness of social responsibility and maintain business ethics.”


SOMBOON GROUP

Environmental Aspects

Center of environmental community learning Energy saving program Green School program – Integrated environment and

community concept

Social and Community Aspect

Drug-free company, cigarette- and alcohol-free program, Good food for employees for better health program External Community Involvement Program


SOMBOON GROUP

Tools / Concepts

Pursuing CESR activities through Stakeholder Engagement

Engage all stakeholders including employee, supplier, customer, community and partner in CESR programs

LESSONS LEARNED

SOMBOON GROUP

Challenges

Communication with local communities at initial stages Management buy-in and employee participation

Cost and Benefit

Obtain License to Operate Increased productivity Gaining a good reputation Enhanced employee morale Lower spending on community/ social projects through employee

volunteer program and in-kind contribution from partners only around 200,000 baht in cash and estimate cost of 403,500 baht on Employee Volunteer in year 2005


SOMBOON GROUP

QS 9000 Certificate

ISO 14000 Certificate

ISO/TS 16949 Certificate

2003: Quality Improvement Award (Zero Claim) and Quality Excellence


SOMBOON GROUP

Model Employee Volunteer Programs

1. Donation2. Community Involvement

Strategic program development on public issues

1. The Sixtieth Anniversary Celebrations for His Majesty's Accession

2. Livable community – restoring school, religious places and public infrastructure in local communities

CONTACTADDRESSMs. Jiranya Ratchinda

Manager – Strategic Corporate CitizenshipHuman Capacity Development Division

KENAN INSTITUTE ASIAQueen Sirikit National Convention Center2nd Floor, Zone D, Room 201/260 New Ratchadapisek Road,Klongtoey, Bangkok 10110

Tel: 0-2229-3231-2 ext. 232Fax: 0-2229-3130E-mail: [email protected]: www.kiasia.org

Chaiyod Bunyagidj, Ph.D.Vice President

THAILAND ENVIRONMENT INSTITUTE16/151 Muang Thong Thani, Bond Street,Bangpood, Pakkred,Nonthaburi 11120

Tel: 0-2503-3333 ext. 405Fax: 0-2504-4826E-mail: [email protected] Website: www.tei.or.th

Q & A

Documents

The Business Case for CESR: the Thai Experience Ms. Jiranya Ratchinda