It’s been a week since Nestlé held its second international Creating Shared Value Forum, which has given me time to reflect on the day’s lively series of debates.

The decision to invite some of - in Nestlé chairman Peter Brabeck’s words - ‘the best minds available’ to discuss the role that business and other global partners can play in addressing key challenges in nutrition, water, and rural development over the next decade, was guaranteed to generate a fascinating variety of opinions.

In the end, these came not only from the Forum’s expert speakers, but also the government officials, academics, and charity, NGO, and media representatives in the audience, the 3,500 people from who followed the live webcast online, and all those who submitted questions to the panel and took part in the parallel online discussion here.

Although the Forum served to highlight the complexity of the problems in hand, and the fact that they have are no simple solutions, the extent to which they resonated with a cross-section of international society was clear.

Whether it was Peter Brabeck asserting “that corporate philanthropy is absolutely wrong”, Jane Nelson of Harvard Kennedy School observing that partnerships “are absolutely critical to the delivery of shared value”, or the online participants asking if a company’s commitment to sustainable practices can impact its profitability, or what multinationals like Nestlé can do to encourage best practice among small farmers, participants were motivated one thing: the desire to achieve lasting impact by finding better ways of working together.

If there a consensus was to be had, it was that Creating Shared Value, championed by Nestlé as the operating model which goes beyond traditional concepts of Corporate Social Responsibility, could be a real driver of positive collaborative action if private, public and civil institutions are prepared to enter an open constructive dialogue, where knowledge about potential risk, as well as value creation, is freely shared.

 

Corporate Social Responsibility programmes are now common place across the business world.  What constitutes successful CSR, however, continues to be questioned, especially as the economic crisis dominates headlines.  Now, more than ever, Corporate Social Responsibility programmes need to earn their place in the business world.  This week, three commentators are united in their recognition that there is a real value in maintaining and supporting CSR projects, but only if organisations ensure all projects contribute to the core business.  The future lies in creating shared value, not simply charity for charity's sake. The first of these commentators, Mike Pandey who writes in the Economic Times, argues that Corporate Social Responsibility principally provides companies with a 'tool created for giving back'.  He questions, however, whether we have used the tool in the way in which it was first intended.  He discusses the strain we have collectively placed on the Earth's resources, suggesting that the economic downturn has forced us into a period of retrospection and introspection.  He questions whether we have done enough to 'pay back what we have taken' from the Earth and suggests that this may be an empty promise for many companies and corporations.  Some, however, have begun to live up to their promises, taking the first steps towards making CSR something real and valid within a company, for real benefit to the world around us.  He concludes that a 'greater collective effort is needed if we want a change, if we want a future'. Julian Evans of the Wall Street Journal agrees that that the global recession has forced companies to reassess what their corporate social responsibility means to them.  More so than Mike Pandey, Evan is hopeful that this is giving companies the opportunity to ensure that their CSR projects are core to the wider business values and intentions, rather than 'marginal initiatives'. Very much in line with the central arguments that sit behind Creating Shared Value, Evans refers to the comments of Eric Schmidt, chief executive of Google at Davos; http://www.youtube.com/watch?v=VpDjcuYVWxo who said that he sees no difference between the social responsibilities of business and their fundamental business responsibilities. Not only must a business use their CSR projects to support the wider business needs and objectives, this integration must then be clearly communicated through CSR reporting.  Prakash Sethi writes on this issue for Ethical Corporation, stressing that a business' CSR programme must have both business and social benefits if it is to be seen positively by consumers.  He argues that companies need to ensure their corporate social responsibility reporting has a sense of true integrity. Sethi writes that the 'new emphasis' in CSR reporting is to focus on a company's core business activities and their impact on the sustainability of the planet's environment and inhabitants. We aim to achieve this with Creating Shared Value.  There’s a mutual business and philanthropic benefit to be had from projects that are sincerely devised to assist the world around us while furthering the values and needs of the business.  One example of this is the work being done in Latin America to ensure that Creating Shared Value is at the heart of each stage of the value chain.  http://www.youtube.com/watch?v=wNlEvxxp2fU

Sarah Barrell’s article in The Independent about a growing breed of MBA graduates who are looking to do well by doing good provoked me to write this post on the current crop of students that seem to be attracted to CSR.

 

An increasing number of students are showing interest and involvement in corporate social responsibility, not just in terms of additional academic credits but also in terms of active engagement in CSR/sustainability forums as well as in development projects. One such example is Universities Fighting World Hunger (UFWH), which represents a campus best practice in international programming and sustainable human development. 

 

Having been a part of in the CSR/sustainability arena for the past 4 years within the United Nations, and now at Nestlé, it is very gratifying to see the rapid increase in the number of students focusing on CSR. But is this just a passing trend, or is CSR truly becoming a movement within Gen-Y? Your thoughts welcome!

 

For students out there who are considering CSR/sustainability as a career option, one great resource to be a part of is Net Impact, an international NGO that uses its 7000+ members consisting of students and professionals to create a more socially and environmentally sustainable world through businesses.

 

 

What is the current state of play of CSR in China? Has CSR come into its own in the country? Is it pervading only multi-national corporations or has it trickled down to SMEs as well? Wei Zheng, senior project manager as CSR Asia, writes an interesting article on the state of play of CSR in China.

 

 

 

The inaugural East African CSR Awards 2010 will showcase and reward companies that have best integrated CSR into their business management strategies. The first of its kind, these awards aim to showcase best-in-class CSR programmes by Burundi, Kenyan, Rwandan, Tanzanian and Ugandan businesses. Deadline for entries is 26 March 2010. The awards will be presented on 5 May 2010 during the World Economic Forum Africa in Dar es Salaam, Tanzania. For more information on how to enter, please visit: http://www.eastafricancsrawards.com/

In the wake of the financial crisis, MBA students are being taught about corporate social responsibility. Nic Paton shares his views with The Guardian.

The Boston College Center for Corporate Citizenship, a membership-based research organization associated with the Carroll School of Management, has recently developed a guide for companies wishing to report on CSR for the first time, as well as those looking to deepen their understanding of what makes for a thorough CSR report. Although this guide is predominantly focused on CSR reporting as practiced by North American companies, it is applicable to CSR reporting more generally as well. Click here to download the Guide. Note: The Guide is freely available for download, but you must be logged in as a subscriber or member to The Boston College for Corporate Citizenship to view the publication.

An article by Arvind Singhal a columnist of Business Standard, a financial news daily on India’s CSR track record as the country celebrates 60 years as a Republic. As the Indian republic celebrates its 60th anniversary with pride and hope, this milestone should be a reason for all Indians to take a pause to reflect not only on the achievements of the past 60 years but also on what more needs to be done in the coming years to ensure that every Indian has a smile on her face each day of their lives. With the Indian economy showing extraordinary resilience, poised to grow on a strong, sustained basis for years to come, and creating in the process unprecedented wealth for corporate India, it is time that “corporate social responsibility (CSR)” be reinterpreted in the context of current and future challenges faced or likely to be faced by the Indian society. Unfortunately, the track record of corporate India has been less than exemplary when it comes to CSR of any sort. Barring a few notable, enlightened business houses, including Tata, Birla and Godrej, the efforts have largely been limited to setting up of a hospital or two, a school or a college, a few scholarships, adoption of a few villages to provide some basic amenities, or launching a few public communication campaigns. While all of these efforts are welcome and laudable, they are not enough to make a visible impact on India. Further, a potentially disturbing development may also be in the making. With global warming and environmental degradation occupying (rightfully) much international and national attention, many large businesses have (again, rightfully) also focused their attention on “sustainability”. The risk is that environmentally responsible business practices are now actually a business imperative, and should not be seen as CSR per se. With many Indian (and international) companies now reaching billion or multi-billion dollar revenue scale in India, they should consider deploying some of their formidable innovation, product development, manufacturing, distributing, marketing, and managerial skills towards coming out with truly revolutionary, paradigm-altering products and services providing appropriate, cost-effective solutions to those hundreds of millions of Indians at the bottom of the pyramid. Merely allocating a few crores of rupees or a couple of million dollars for product R&D — either in-house or through third parties and NGOs — will, sadly, not be enough. Stripped down versions of existing products and services in an attempt to make them more affordable to the masses may also not really be enough. India’s challenges, while humungous, are easy to identify and understand. Hundreds of millions are deprived of basic physical and social infrastructure, which includes potable water, basic sanitation and hand-wash solutions, clean energy for lighting and cooking, basic housing, dietary supplements to make good deficiency in critical minerals and vitamins, primary health care, affordable personal transportation and elementary education that includes imparting of a basic understanding of their political and civic rights and obligations. In this backdrop, truly laudable and potentially very high impact CSR effort could be when giants such as Reliance, Tata, Birla, HUL, P&G, Nirma, Bharti, Essar, Mittal Arcelor, Godrej, Apollo, Max, Fortis, GE, Philips, LG, Samsung, Videocon, Maruti, Hyundai, Mahindra, Manipal, Amity, Raymond, Arvind, DLF, GMR, GVK, Infosys, Wipro, Bennett Coleman, Dainik Bhaskar, IBM, HP, HCL and others take up the challenge of finding revolutionary out-of-the-box solutions to these challenges. Each of these giants do have the capability to line up intellectual and financial resources from across the planet to come up with out-of-the-box approaches and path-breaking technologies that can help India (and indeed, the poor across the world) provide some succour and hope to its deprived and needy. As in the case of developing products and solutions for the well-off, the starting point has to be the end “customer”. The approach has to be “customer” and “context” centric. If at all a fortune has to be sought from serving those at the bottom of the pyramid, it must be measured in their smiles and happiness, and return on capital to be monitored through the success achieved in tackling of the challenge. Would the shareholders of such large public and private enterprises allow such investments? There is enough reason to believe that they would give their assent provided these are reasonable in the context of the size of such enterprises and have a well-articulated vision and action plan championed by owner-promoters or the CEOs themselves. Hopefully, sometime in the coming years, the Republic Day will also see recognition and bestowing of awards to exemplary innovators and practitioners of such CSR.

An article by Yoo Soh-jung that appeared in The Korea Herald states that a majority of the Korea’s top 100 companies by revenue fall short of being equipped with measures needed to meet international standards of corporate social responsibility, according to a report released by the Korea Chamber of Commerce and Industry. The report on new trade barriers concerning the International Organization Standardization (ISO) 26000 states that companies that fail to meet the international standards of social responsibility have the risk of facing a bottleneck in their export line. The ISO 26000, the international standard for measuring a company’s CSR performance will likely be released by the end of this year is expected to cover the areas of management structure, human rights, labour practices, environment and fair trade. Please see an earlier post on csv.org on ISO 26000. The report highlighted that only 4.9 percent of the top 100 Korean companies are equipped with the tools necessary to meet the ISO standards. Another 36.1 percent said they are "somewhat" equipped, while another 36.1 percent said they have no tools and are instead following the industry trend by monitoring the moves of their competitors. Another 21.3 percent said they are "practically unequipped," while 1.6 percent expressed "no interest." "Although the ISO 26000 would be like a guideline, it can eventually pose as a trade barrier for our companies," the KCCI said in a statement. "The international standards will not only be applicable to companies, but also the government, civic groups, labour groups and research institutions; therefore, discussions over the roles and responsibilities are necessary between the relevant bodies or personnel," it highlighted.

The annual survey “Asian Sustainability Rating” by CSR Asia has revealed that Asia Pacific companies are increasingly focusing on the environment in their CSR reports. Japan is leading the region at 70.6 per cent, followed by Australia at 70.3 per cent, and India in third place at 47.8 per cent. The countries included in the survey were: Australia, China, Hong Kong, India, Japan, Malaysia, Pakistan, Philippines, Singapore and Thailand. The Asian Sustainability Rating (ASR) is a tool developed jointly by CSR Asia and Responsible Research and is based on proprietary research. This year, there are plans to increase coverage to 500 companies in the region and to develop ‘sustainable investable universes and indices’ for the investment community based on this data. To view the survey results in detail, please visit: http://www.asiansr.com/index.php

By Hafeejul Alam Corporate Social Responsibility (CSR) is currently a key concept of the corporate world. The subject is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that "CSR is the practice of a corporation internalising the externalities it creates through its business practices." In simple terms, CSR means corporations taking responsibilities for their actions and doing something about improving them. There is a growing consensus amongst both the academics and development activists regarding the crucial significance and topicality of business organisations acting in a more socially and environmentally responsive manner. As voluntary reporting initiatives often fail to generate the required responses amongst the companies, one can very rightly argue in favour of mandatory reporting of social, ethical and environmental information as the way forward. Research and practical demonstration on the possible ways and means of ensuring more effective social and environmental disclosures remain generally limited in Bangladesh. This interesting area of study deserves immediate attention from the policy planners, academics, business executives and development practitioners. Of late, the government has, however, started, taking an active interest in CSR, embracing the concept by considering tax exemption for corporate spending on CSR. The very fact that the business community and the government are now talking about doing things to assist the society is a welcome development. With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation wing. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices for improving their impact on society, or to actively seek to ameliorate any negative impact they might have effected. Put it rather simply, CSR should reflect the social, ethical and environmental aspects of a business organisation. It is essentially concerned with the process of communicating the social, ethical and environmental effects of business organisations' economic actions to particular interest groups within the society and also to the society at large. It involves extending the accountability of firms beyond the traditional role of providing a financial account to the owners of capital or shareholders. Such an extension of responsibility rests upon the assumption that companies do have wider responsibilities than simply making money for their shareholders. Further, it should be emphasised that the corporate attitude should not be mere rhetorically loaded but should involve a planned and substantiated approach. For example, when a company says that it has taken environmental issues seriously, its sincerity may be questioned if there is no appropriate long-term corporate environmental policy and quantitative indicators to measure performance against the policy. Here the trade bodies may play a crucial role. The trade bodies, particularly the apex trade body FBCCI, may arrange more and more workshops and seminar so that most of the affiliated companies adopt not a rhetorically bold but practically feasible approach to the wider issues of community reinforcement, social compliance, acting responsibly inside factory, protecting the environment and the society. The corporate attitude, particularly towards environmental issues, should not be of interim in nature but of long-term commitment. It is believed that rather than giving tax breaks to corporations for practising CSR, the government should set policies in place or empower the FBCCI to monitor and publish CSR practices of corporations. If a corporation embraces genuine CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then there is no doubt that the corporations will be rewarded by the market system. The consumers, on their part, should be more vocal and take responsibility for encouraging companies to embrace CSR and ethical practices. They should demand that businesses set in CSR in the core of their operations. The companies should succeed and do good deeds at the same time. After all, it is the consumers who possess the ultimate purchasing power to make the company a success.

The Center for Child Rights and Corporate Social Responsibility (CCR CSR), a non-profit centre backed by the Swedish government was launched in Beijing with the aim of promoting corporations to better protect child rights. The center will also provide advisory services to Chinese corporations that are committed to child rights protection.

The center is mainly sponsored and supported by the Save the Children Sweden, a Stockholm-based child rights NGO.

As part of the Canadian government’s strategy on CSR, The Centre for Excellence in Corporate Social Responsibility was launched in Ottawa. This new website will create a one-stop-shop with the latest information on corporate social responsibility rules, laws and best practices, as well as timely and practical information and advice on foreign countries, local networks and relevant experiences of Canadian companies, civil society and other stakeholders operating abroad. The focus of this site is to help Canadian companies doing business around the world by providing tools and information for all stakeholders, and raising the bar for excellent CSR-related practices in the extractive industry. In addition, Canada has also created a $20 million programme targeted at Canadian businesses that wish to invest responsibly in developing countries. This programme aims to increase Canadian direct investment around the world and strengthen global economic partnerships.

Three-quarters of senior U.S. executives say corporate citizenship can boost profits over time, according to the Economist Intelligence Unit's report, “Corporate citizenship: profiting from a sustainable business”. Sixteen percent said the top motivation for such initiatives were revenue growth, another 16 percent said they aim to increase profits, and 13 percent said the main goal is to reduce costs. To read the complete article, please visit: http://www.environmentalleader.com/2008/11/26/us-execs-say-csr-initiatives-can-boost-profit/

Speaking at a Forum* on the relevance of corporate social responsibility (CSR) during an economic downturn, Nestlé Malaysia’s Managing Director Mr Peter Vogt shared Nestlé’s concept of CSR called Creating Shared Value, which is to create value and sustainable growth for all of the company's stakeholders - from shareholders to the societies where it operates. He stressed that combining CSR and business strategy is good for both business and the community and enables Nestlé to have sustainable long-term initiatives. He added that even more so in a period of difficulty such as the economic downturn, Nestlé continues its CSR activities, as it is embedded in the company's business strategy. He also encouraged well-established companies such as Nestlé to mentor and assist SMEs in developing sustainable environmental management policies and practices. In the long term, these environmental practices can bring cost savings to the company, for instance, through energy-saving initiatives or effective waste management. Mr Vogt reiterated, “Companies should self regulate and adopt responsible and sustainable environmental approaches to their business operations. Where governments can assist is in strengthening enforcement.” *organised by the StarBiz-ICR Malaysia Corporate Responsibility Awards 2009, Star Publications (M) Bhd and Institute of Corporate Responsibility (ICR) Malaysia.

An extract of an article by Obiora Onyeaso, managing director of an investor relations firm in Nigeria.

  Like other fuzzy terminologies, CSR has several definitions. I like Geoffrey Heal’s best because it places CSR at the vortex of interactions where the company enjoys social subsidies in the process of creating private benefits for shareowners. Mr. Heal defines CSR as “a programme of actions taken to reduce externalised costs and avoid distributional conflicts”. His categorisation of CSR programmes as debts paid and obligations due and not the “thank you to our customers and community” they are frequently presented as is spot on. Peculiar Nigerian definition However, in a twist, among Nigerian companies it has come to be almost exclusively identified with donations and sponsorships. This one-dimensional conception of CSR as patronage reflects the expectations of demand communities around the company. A sunken borehole, refurbished school library, repainted dispensary block, food items for an orphanage, support for a cultural event and a new police patrol vehicle are a few examples of responses to such expectations. Although, companies on the Nigerian Stock Exchange spend several millions and non-trivial management time on such community outreach programmes, very few have any coherent publicly accessible policies that guide their engagements. Notable exceptions are Access Bank and Total which, in addition, publish CSR reports on their websites even though the thrust of their efforts are still overwhelmingly aimed at the philanthropy. As commendable as these commitments are, the often random selection process and allocation decisions may one day be challenged as misguided, unproductive or profligate. More than displays Corporate social responsibility is much more than widely publicised displays of the value-laden label “good corporate citizenship”. KLD Research & Analytics, publisher of the KLD400 Index, the leading benchmark on environmental, social and governance metrics for public companies and global authority on social research for institutional investors, lists eight indices for assessing CSR performance: community relations, corporate governance, diversity, employee relations, environment, human rights, product quality and safety, and controversial business issues. Until now, most local initiatives have focused on community relations, and specifically, donor activities. Examples include Zenith Philanthropy, Ecobank Cares and the Dangote Foundation. By extension, local CSR ratings like those published by SIAO, the consulting, tax, audit and HR firm, have emphasised such donor preoccupations. Reporting on the other seven indices is negligible.  In developed country markets, CSR has moved beyond the prevalent cosmetic do-gooder profiling to a set of stringent investment screening criteria judged according to these seven themes. Ethical funds and socially responsible money managers want to see much more than pictures of staff members clearing blocked drains or a company branded manicured lawn at a city centre roundabout.  These investors recognise that socially responsible organisations also tend to be well-run institutions. Over time, the sustained demand for a company’s securities by these funds and investors will raise its valuation, therefore shareholder returns, and more than make up for any prior costs in responsible behaviour. The task at hand for companies is to learn these criteria and work towards inclusion in the selection universe of these money managers. To view the complete article, please visit: http://customsstreet.com/csr-salad-is-corporate-social-responsibility-a-fad-diet-or-nutritional-staple/ Is Corporate Social Responsibility a fad diet or nutritional staple? We welcome your comments!

The United Nations Global Compact and the International Organization for Standardization will be celebrating the adoption of ISO 26000, an international standard providing "guidance" on corporate social responsibility. Foreseen to be adopted by the end of this year, the ISO 26000 guidelines will be the benchmark against which the United Nations, environmentalists, human rights advocates, and government officials will measure corporate "behavior" and demand reforms and reparations accordingly.  For more information on ISO 26000, please visit: http://www.iso.org/iso/socialresponsibility.pdf

Jeffrey Hollender, Chief Inspired Protagonist at Seventh Generation, talks about the next phase of corporate responsibility – long-term thinking.

The new Companies Bill 2009 in India has proposed laying guidelines for corporate social responsibility (CSR). Minister of Corporate Affairs Salman Khurshid has said the objective of incorporating CSR in the Companies Bill is to guide India Inc on the way of making money that helps inclusive growth.

 

Corporate Affairs Secretary R. Bandopadhyay said that CSR is one area in which Indian President Pratibha Patil takes a huge interest and that the Bill seeks to make CSR an integral part of corporate governance. The guidelines would allow India Inc to take voluntary initiatives, as well. However, principles would be laid so that it becomes mandatory for India Inc to mitigate with the climate change issues.

The University of Ghana Business School recently launched a report on corporate social responsibility (CSR). The report presents the broader aspects of CSR and as well as the opportunities and challenges it presents to businesses, and is based on a study conducted in six countries – Ghana, Kenya, Malawi, Mozambique, Namibia, and South Africa.  During the launch of the report, Dr Daniel Ofori, Head, Organisation and Human Resource Management of the University of Ghana Business School and co-author of the report, explained that CSR goes beyond philanthropy and covers a wider perspective that includes observing sound environmental maintenance practices, good treatment of workers, ensuring quality products, adhering to basic ethical standards in social and business circles, as well as observing their legal obligations.