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Transcript of 7a. CSR Past Present Future.pdf
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CSR Past, Present & Future
An overview of key trends & conceptsWayne Visser
CEO, CSR International
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Before we begin
YOUR LEARNING EXPECTATIONS
Write down one question you have about corporate socialresponsibility (CSR), which you hope this course may
help to answer.
Be as specific as possible.
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Introductions
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Course Outline
09.00 - Registration 09.30 - The Evolution of CSR and related concepts
10.30 - Coffee Break
10.45 - CSR in a Developing Country Context
13.00 - Lunch Break 14.00 - CSR in Asia and India
15.30 - Tea Break
15.45 - ISO 26000, CSR 2.0 and the Future
17.00 - End
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Why is CSR Important?
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Wealth Distribution
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Issue: Population growth
Source: UNEP
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Global Warming
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Corruption
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World Consumption
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Water Distribution
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Global Obesity
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A Short History of CSR
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CSR concepts & terms
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CSR – 10 related concepts
Business ethics Business & human rights Corporate accountability Corporate citizenship Corporate governance Corporate social responsibility Corporate sustainability Environmental management Occupational health & safety Stakeholder engagement
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The origins of CSR: 1850-1950
John H Patterson: National CashRegister
Cornelius Vanderbilt & John DRockerfeller
Macy’s of New York West Cork Railroad & Steinway
cases Pullman Palace Car Company Charter of Incorporation YMCA Community Chest Movement Barnard, Clark & Krep books Fortune Magazine survey
1850
1950
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The development of CSR: 1950-2005
Bowen – Social responsibilities ofbusiness
Carson – Silent Spring Nader – Unsafe at any speed
Friedman – Social responsibility is tomake profits Schumacher – Small is beautiful Carroll – CSR pyramid Freeman – Stakeholder theory Elkington – Triple bottom line Prahalad & Hart – Bottom of the pyramid Porter – Strategic CSR
1950
2005
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Exercise
Write down your definition of CSR Share with the class
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CSR and
Related Concepts
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Definition: CSR
The
Economic
Legal
Ethical, and
Discretionary orphilanthropic
expectations that society has
of organisations
- Archie Carroll
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Economic - Anglo American case
Value added statement(Africa) Employment (135,000
employees, value added $3.3bn)
Distribution of benefits(employees $1.9 bn,suppliers $4.2 bn)
Tax & related payments togovernment ($630 m)
Capital expenditure ($1.8 bn) BEE expenditure &
transactions ($835 m) Shareholders (32% South
African)
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Economic – Unilever Indonesia & SA
Indonesia Jobs created
Direct: 7,069
Indirect: 293,695
Economic value added Direct: $212 million
Indirect: $421 million
South Africa
Jobs created Direct: Indirect ratio – 1: 22
Indirect jobs: 100 000
Source: Unilever & Oxfam Report, 2005Unilever & PwC Report, 2007
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Legal - Anglo America
Principle “We respect the laws of host
countries” and “we will comply with all
laws and regulations applicable to ourbusinesses and to our relationship
with our stakeholders” Fines
Safety breaches ($235,000),environmental incidents ($40,000)
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Ethical - Quote
Whenever an institutionmalfunctions asconsistently as boardsof directors have innearly every majorfiasco of the last forty orfifty years it is futile toblame men. It is theinstitution thatmalfunctions
Peter Drucker, managementauthor
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Ethical - Anglo American case
Principle “We are implacably opposed to
corruption. We will not offer,pay or accept bribes orcondone anti-competitive
practices” Mechanisms
Whistle-blowing facility
Support of Extractive IndustriesTransparency Initiative
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Philanthropic - Rankings
With $31 billion inassets, the Bill andMelinda GatesFoundation is theworld's largest charity.
Warren Buffett'sadditional $31-billioncommitment to the Bill &Melinda Gates
Foundation will fundefforts to improve globalhealth and U.S.education.
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Philanthropic - Anglo American case
Chairman’s Fund 7,800 projects & $66 m in pastdecade
442 projects & $10 m in 2003
HIV/Aids
HIV wellness programme, 3,300employees $4 m to LoveLife AIDS charity Voluntary AIDS testing, 10% of
employees Free ARV treatment, all employees
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Corporate Social Responsiveness
The capacity of a corporation to respond to socialpressures (Carroll, Wood, Frederick)
Carroll’s four strategies of responsiveness:
Reaction
Defence
Accommodation
Pro-action
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Corporate Social Performance (CSP)
Principles of CSR Processes of social responsiveness
Outcomes of corporate behaviour Social policies
Social programmes Social impacts
Donna Wood
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CSR Codes
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Stakeholder Theory
Source: R. Edward Freeman in The A to Z of CSR
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Stakeholder Management
Source: Novo Nordisk
Power Urgency Legitimacy
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Environmental Management
Source: Richard Welford, in The A to Z of CSR
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Health & Safety
Source: Richard Welford, in The A to Z of CSR
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Sustainability (Triple Bottom Line)
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Business Ethics
Source: Crane & Matten
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Corporate Accountability
Source: Sillanpaa, A to Z of CSR
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Human Rights
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CSR in Developing Countries
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Exercise
Write down the mostimportant: Economic
Social
Environmental and Ethical
issue for developing countries(one for each)
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Chart: Population age
Source: UN
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Facts About Development
2.5b still live on less than $2 a day; poverty
reduction slowed down in the 1990s 10m unnecessary child deaths each year 115m children still out of school; average
years of schooling in South Asia half that of
rich countries; even lower in Sub-Saharan Africa Still more than 1b have no access to safe
water; 2.6b lack access to sanitation 18 countries with 460m people had a decline
in their HDI in the 1990s Since 1981, 65 million people have been
infected with HIV and 25 million have died of AIDS-related illnesses.
Source: UNDP
Mill i D l t G l
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Millennium Development Goals
Source: UN
Overcoming poverty is not a gesture ofcharity. It is an act of justice. It is theprotection of a fundamental human right,the right to dignity and a decent life.
Nelson Mandela, Former President of South Africa
E i
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Exercise
Watch the Jeffrey Sachsvideo (extract)
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CSR pyramid: North v. South
Developing
countries
Legal compliance Ethical conduct
Philanthropy
Economiccontribution
Source: Visser (2006)
Developed
countries
Philanthropy
Ethical conduct
Legal compliance
Economiccontribution
Source: Carroll (1979)
v.
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CSR pyramid: Guatemala
Policy engagement Community responsibility
Family responsibility
Economic responsibility
I R M t i
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Issues v Responses Matrix
Energy / climate
Chemicals / pollution
Accounting scandals
Poverty / development
Human rights / labour
Corruption /transparency
Kyoto Protocol, EU Emissions TradingScheme, ClimateWise
Responsible Care, ISO 14001, ToxicRelease Inventory, Environmental duediligence
Corporate governance, Sarbanes Oxley,Global Reporting Initiative, AA1000
Base of the Pyramid, MillenniumDevelopment Goals, Global BusinessCoalition on HIV/Aids
Global Compact, SA 8000, UN Human
Rights for Business Extractive Industries Transparency
Initiative, NEPAD
Issues Responses
D
e v e l o p e d
D e v e l o p i n g
D l i C t CSR I
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Developing Country CSR Issues
Role of legislation - BEE v. Env. rehab. Impact of voluntary codes - King II v. AA 1000 Influence of globalisation - Sentrachem v.
SPDC Poverty alleviation - Beyond philanthropy? HIV/AIDS - Beyond the gates? Transparency - Beyond corruption? Global vs local priorities - E.g. Energy v.
Health
Profitability vs disinvestment - E.g. AngloZambia Political vs corporate governance - E.g.
NEPAD
D i f CSR i D l i C t i
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Drivers for CSR in Developing Countries
INTERNAL DRIVERS
EXTERNAL DRIVERS
Socio-
economic
priorities
Political
reform
Governance
gaps
Crisis
response
International
standardisation
Cultural
tradition
Investment
incentives
Market
access
Stakeholder
activism
Supply
chain
integrity
Source: Visser, W. (2008)
E i
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Exercise
Choose a CSR leader inIndia or from a developingcountry
Discuss: What are the main issues
being addressed?
What is the approach toCSR?
What codes & standards arebeing used?
E i M k t S
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Emerging Markets Survey
Argentina Brazil
Chile China
Colombia Czech Republic
Egypt Hungary
India Indonesia
Malaysia Morocco
Mexico Pakistan
Peru Philippines
Poland Russia
South Africa Thailand
Turkey
127 emerging marketcompanies (largest20% from eachcountry)
Compared with all the
companies in Japan,North America andWestern Europe
Source: Jeremy Baskin (2006); reworkedEIRIS data - 2005
Fi di (1)
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Findings (1)
Average total score (out of 10)
6.3
4.6
4.1 3.8
0
1
2
3
4
5
6
7
Europe Japan North America Emerging markets
Source: Jeremy Baskin (2006); reworkedEIRIS data - 2005
Findings (2)
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Findings (2)
Community/Philanthropy
6.25.9
4.9
4.0
0
1
2
3
4
5
6
7
Europe Emerging markets North America Japan
Source: Jeremy Baskin (2006); reworkedEIRIS data - 2005
Findings (3)
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Findings (3)
Ethics
7.2
6.6
5.5
3.4
0
1
2
3
4
5
6
7
8
North America Europe Japan Emerging markets
Source: Jeremy Baskin (2006); reworkedEIRIS data - 2005
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Growth in ISO14001 Certifications
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Growth in ISO14001 Certifications
11,859
19,061
29,568
38,219
50,220
65,438
2,031
3,415
6,198
10,206
14,513
23,668
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1999 2000 2001 2002 2003 2004
Emerging markets
OECD High Income
Source: ISO Survey, 2005
Findings (5)
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Findings (5)
BRICS comparative scores
1 . 1
7 . 2
2 . 1
5 . 6
5 . 8
0
1
2
3
4
5
6
7
8
9
10
South Africa Brazil India Russia China
Overall scorePhilanthropyEthicsEnvironmentHuman Resources
Average scores: Europe (6.3); Japan (4.6); North America (4.1); Emerging mkt average (3.8)
Source: Jeremy Baskin (2006); reworked
EIRIS data - 2005
GlobeScan Polls
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GlobeScan Polls
Source: GlobeScan (2005, 2007)
What is the most important thing a company can do to be
seen as socially responsible? The US, Canada and Brazil - community involvement
Australia, UK and much of Europe - protecting the environment
Mexico and China - quality and safety of their products
How responsible should companies be held for their impacton society More than 80% of Brazilians hold business responsible for its
performance in 10 dimensions of CSR
59% of British
57% of Americans
53% of Indians
46% of Chinese
Reputation Institute studies
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Reputation Institute studies
Source: Reputation Institute
CorporateGovernance
1. Chile
2. South Korea
3. Australia4. Canada
5. India
6. USA
7. Italy
8. Mexico9. UK
Importance to corporate reputation of:
Social /Environment
1. Finland
2. Norway
3. Netherlands4. Denmark
5. Sweden
6. Portugal
7. France
8. Russia9. Poland
Workplace /Employees
1. Finland
2. Portugal
3. Denmark4. Canada
5. France
6. Brazil
7. Switzerland
8. Netherlands9. Poland
EIRIS Research
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EIRIS Research
Source: EIRIS, 2007
High impact companies with advanced environmental
policies 90% in Japan
90% in Europe
75% in Australia/New Zealand
67% in the USA
15% in Asia (excl. Japan)
Companies operating in high-risk countries that havedeveloped a basic human rights policy 75% of European companies
40% of US companies
Bottom of the Pyramid (BoP)
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Bottom of the Pyramid (BoP)
The Nature of the BoP Market
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The Nature of the BoP Market
There is money at the BoP Access to BoP markets BoP markets are brand-conscious The BoP market is connected BoP consumers accept technology
Create the capacity to consume Affordability Access Availability
Trust is a prerequisite Dignity & choice
Case: Grameen Bank & Microfinance
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Case: Grameen Bank & Microfinance
Now a $2.5 billion banking enterprise
with over 7 million active clients,affecting 35 million family members.
By 2007 there were 3,316 microcreditinstitutions reaching over 133 millionclients. 93 million (up from 7.6 million in 1997)
were among the poorest when they tooktheir first loan. Of these poorest clients,85% percent, or 79 million, are women.
The microcredit model has spread to
over 50 countries worldwide, from theU.S. to Papua New Guinea, Norway toNepal.
“Worms-eye view”
Exercise
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Exercise
What the Yunus interviewvideo
Case: Hindustan Lever Ltd (HLL)
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Case: Hindustan Lever Ltd (HLL)
Following the success of local firm Nirma Ltd in India,
Unilever redesigned its detergent business: Single serving sachets Reduced oil to water ratio (due to river & public water
use) Decentralised production, marketing & distribution Lower costs & margins
HLL has also developed a low-energy fridge thatallows ice cream to be transported across India instandard, non-refrigerated trucks
Case: Mobile Phones
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Case: Mobile Phones
Africa = 1000%growth in 5years
Mobile phones: Growth dividend
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Mobile phones: Growth dividend
Vodafone Study – 92countries, 1980-2003
Philippines (penetration 27%)may enjoy 1% higher annualper capita income growth than
Indonesia (9% penetration)due to mobile phones
A developing country whichhas an average of 10 moremobiles per 100 population
between 1996 and 2003 wouldhave enjoyed per capita GDPgrowth 0.59% higher
No education
Primary
Secondary
Technical college
University
No education
Primary
Secondary
Technical college
University
Owners
Users
Tanzania
Reasons for rapid growth
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Reasons for rapid growth
Shorter payback
period Lower skill levels
needed Lower barriers to
entry
Business modelinnovations Prepaid system Grameen model of
micro-entrepreneurship
Mobiles as publictelephones
Telecentre models
Exercise
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Exercise
What is your assessmentof the BoP model? Strengths?
Weaknesses?
Social enterprise
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Social enterprise
1844 - 28 working men in Rochdale in
the UK scraped together £28 to opentheir own shop
1850s - Franz Hermann Schulze-Delitzsch established the first creditunions in Germany
1981 - Bill Drayton set up Ashoka inWashington
1984 - Panama Marcos McGrath andStephan Schmidheiny set up FUNDESin Panama
Klaus Schwab created the SchwabFoundation for Social Entrepreneurship
1991 - Café Direct and The Big Issuewere founded
Social enterprise
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Social enterprise
I like to support causeswhere "a lot of goodcomes from a little bitof good," or, in otherwords, where thepositive social returnsvastly exceed theamount of time andmoney invested
Jeff Skoll, First President ofe-Bay
http://www.skollfoundation.org/videos/
Exercise
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Exercise
Having selected andwatched a socialenterprise video, discuss: What was the issue?
How was it beingtackled?
What lessons can welearn?
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Regional & National
Perspectives Asia & Malaysia
Exercise
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Exercise
Each is allocated one regional perspective
Please take 15 minutes to recap on these
Then summarise key insights to the group
Discuss What do regions have in common?
Are the any distinctive characteristics?
Report back to the class
Top 10 Issues in Asia
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Top 10 Issues in Asia
1. Climate change
2. Corporate governance
3. Labour & human resources
4. Environmental issues
5. Partnerships with stakeholders
6. Regulation & leadership from governments
7. Community investment & pro-poor development
8. Product responsibility
9. The professionalisation of CSR
10.Bribery & corruption
Influencers of CSR in Asia
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Influencers of CSR in Asia
CSR Asia 2008 Barometer
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CSR Asia 2008 Barometer
Malaysia Top 5
Asia Top 10
CSR Asia 2008 Barometer
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CSR Asia 2008 Barometer
CSR Asia 2007 Study on CSR in Malaysia
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CS s a 00 Study o CS a ays a
Sample Size = 200
Study commissioned by Bursa Malaysia
Exercise
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Discuss What is the state of CSR
in Malaysia?
What are the priority
issues? Where has the most
progress been made?
Where is there still room
for improvement?
Exercise
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Review a CSR report from a Malaysiancompany
Summarise key insights to the group
Discuss Does this reflect the wider Malaysian
experience? Are the any distinctive characteristics?
Report back to the class
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CSR and the Financial
Crisis
The Cost of Financial Crises
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Size of the Financial Crisis
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2007 Figures only
Causes: Irresponsible Banking?
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p g
Causes: Irresponsible Financial Markets?
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p
Warning: The Casino Economy
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g y
" Speculators may do no harm asbubbles on a steady stream of
enterprise. But the position is
serious when enterprise becomes
the bubble on a whirlpool of
speculation. When the capitaldevelopment of a country
becomes a by-product of the
activities of a casino, the job is
likely to be ill-done.‖
John Maynard Keynes
Causes: Irresponsible Corporations?
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p p
―The corporation has a legally defined mandate to
relentlessly pursue—without exception—its own self-interestregardless of the often harmful consequences it might
cause to others. Lying, stealing, killing are not rare
aberrations but the duty of the corporation when it serves
the interests of its shareholders to do so.‖ – Joel Bakan
Causes: Irresponsible Executives?
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p
Causes: Irresponsible Capitalism?
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How will the financial crisis affect CSR?
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CSR International Blog Poll (October 2008)
26%
22%
8%
44% StrengthenWeaken
Change
No Effect
Source: www.csrinternational.blogspot.com
Implications for CSR?
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Philanthropic CSR will be
worst hit
Legal compliance
Ethical conduct
Philanthropy
Economic contribution
Visser (2006)
Source: Visser, W. (2008) Corporate social responsibility indeveloping countries, In Crane et al., The Oxford Handbook of
Corporate Social Responsibility , Oxford: OUP, 473-479.
CSR Pyramid for Developing Countries
Implications for CSR?
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Strategic CSR will be less
affected Example: Coca Cola &
Water
Source: Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, by Michael E.
Porter & Mark R. Kramer
Implications for SMEs
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The supply chain and eco-efficiency will continue to bethe most powerful driversfor CSR in SMEs
SMEs through their leaders
often have strongerphilanthropic commitment
Beyond this, SMEspractices “implicit” rather
than “explicit” CSR
Source: Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, by Michael E.
Porter & Mark R. Kramer
Implications for CSR?
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Embedded CSR willbe the least affected
―CSR can only be resilientif it is part of the DNA ofan organisation, i.e. CSR
will only survive thevagaries of fickle markets,fluctuating profits,financial crises andleadership whims if it is
totally embedded in thecorporate culture, strategyand governance systems‖ – Wayne Visser, 2008
Source: Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, by Michael E.
Porter & Mark R. Kramer
Environmental / moral
Community /social
Human /labour
Financial /
Economic
CSR 2.0 Double-Helix Model™
Copyright CSR International / Wayne Visser 2008
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The Future of CSR
The evolution of responsibility
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1970sShareholders
1980sPhilanthropy
Late 1990sStakeholders
Engagement
Late 2000sResponsible
Competitiveness
Late 1990sStakeholders
Engagement
Late 1990sStakeholders
Engagement
Late 1990sStakeholders
Engagement
Late 1990sStakeholders
Engagement
Late 1990sStakeholders
Engagement
1980sPhilanthropy
Early 1990sCorporateGovernance
Early 2000sCorporate
Accountability
Late 1990sStakeholders
Engagement
1970sShareholders
1980sPhilanthropy
Late 1990sStakeholders
Engagement
The evolution of sustainability
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1970sQuality
management
Late 2000sSustainable markets
Early 1990sEnvironmentalmanagement
Early 2000sTriple bottom line
1980sHealth & safety
Late 1990sHealth, safety
& environment
CSR 2.0 as the new DNA of Business
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ISO 26000: Fit for the future?
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Principles, including: Accountability,
Transparency, Ethics,Stakeholder interests,Rule of Law, Internationalnorms, Human rights
Core subjects, including: Governance, Human
rights, Labour,Environment, Fairoperating practices,
Consumer issues,Community involvement& development
Integration, including:
Organisational characteristics Understanding SR of
organisation
Communication on SR
Enhancing credibility of SR
Reviewing & improving SR Voluntary initiatives on SR
Curse 1 – Incremental CSR
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Source: ISO
Curse 2 – Peripheral CSR
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Source: Greenpeace
Curse 3 – Uneconomic CSR
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CSR 1.0 – Burying the Past
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Web 1.0 and CSR 1.0
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Web 2.0 and CSR 2.0
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Principle 1 - Creativity
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Principle 2 - Scalability
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Principle 3 - Responsiveness
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Principle 4 - Glocality
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Source: Marketing Responsibly, IBE/Mallen Baker,
2009
Principle 5 - Circularity
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Source: Marketing Responsibly,IBE/Mallen Baker, 2009
CSR 1.0 versus CSR 2.0
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CorporateSocialResponsibility Philanthropic
Risk-based Image-driven Specialized Standardized
Marginal Western
Corporate
Sustainability &Responsibility Collaborative Reward-based Performance-
driven Integrated
Diversified Scalable Global
CSR 1.0 versus CSR 2.0: Shifts
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CSR premium
Charity projects CSR indexes CSR departments Ethical
consumerism Product liability CSR reporting
cycles Stakeholder groups Process standards
Base of the pyramid Social enterprise CSR ratings CSR incentives
Choice editing Service agreements CSR data streams Social networks
Performancestandards
CSR 2.0 as the new DNA of Business
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The Challenge Ahead for CSR 2.0
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As with Web 2.0, the success of
CSR 2.0 will depend on:
C = CREATIVITY
S = SCALABILITY
R = RESPONSIVENESS
2 = GLOCALITY
0 = CIRCULARITY
What Have We Got to Lose?
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Good Luck!!!
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You can doanything you
set your mindto when youhave vision
Optional Exercise
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Watch the rest of the JeffreySachs interview video