CSR, Investment and Development -leveraging Corporate Social Responsibility (CSR)

Transcription

1 CSR, Investment and Development -leveraging Corporate Social Responsibility (CSR) strategies of inward investors to create Triple Wins for governments, businesses and communities in low and middle-income countries Veronica Broomes PhD International Development Consultant & Researcher Veronica Broomes PhD September 2012

2 What is CSR? Corporate Social Responsibility (CSR) has different interpretations and names by people in business, researcher, employees in large organisations, NGOs and the public/citizens. Difference also in focus and interpretation by people in developed or developing countries. Both often focus on social aspects with philanthropy being a key pillar as well as employee volunteering and engagement with local communities. Members of the public (consumers, campaigning groups) in developed countries are interested in CSR because of concerns about governance, human rights (including the use of child labour in factories) and issues around ethical businesses and fair trade.

3 Worlds of CSR developed vs developing county drivers CSR drivers for companies in developed countries include boards, employees, shareholders/investors and the wider public (usually consumers). Over the years, this has led to more reporting on CSR, development of the business case for CSR and initiatives closely mirroring a Triple Bottom Line approach. In developing countries in contrast, seem to have more of a single focus approach more aligned to philanthropy and social issues, including health.

4 Drivers and agendas of CSR (Developed vs Developing countries) Developed world Ethical investments Workers rights Brand value Carbon economy Shareholder & other stakeholders Single Bottom Line Triple Botton Line Developing world Health (e.g., Aids Fund) Resource use Living wage (fair, family) Sustainable livelihoods Stakeholders

5 Sectors with examples of traditional CSR approaches Tourism Forestry Extractive Industries Manufacturing Finance/ Investments Agriculture Manufacturing Others

6 Regulated vs Voluntary CSR On either end of the spectrum of views on CSR are: Advocates of CSR becoming Mandatory CSR. These are of the view that it is only through legislation that companies will demonstrate responsible behaviour and become good corporate citizens. Supporters of voluntary CSR argue that companies have obligations to comply with laws governing financial, environmental and social aspects of their operations. What CSR reflects is what companies do above and beyond legal compliance, i.e., Best Practice beyond compliance.

7 CSR Worlds Regulated vs Voluntary Regulated Finance reporting Legal contracts Governance Companies Acts Labour/human rights (Environment Carbon) % profits for social causes Ideal scenario: Voluntary Companies practices are above and beyond Compliance and embedded in core business. Reality: Compliance only by businesses

8 National Policies/Regulations for CSR In 2012, four countries with regulations on CSR: Denmark (reporting require by top 1000 companies) Indonesia (contributions to social issues/society) Mauritius (% profits for social & environmental projects) India (% profits for social projects)

9 Securities Regulations for CSR In addition to regulations, some countries have a requirement of mandatory reporting on CSR/ Sustainability by national Stock/Security Exchanges South Africa Brasil USA (from Jan 2010) 50 Socially Responsible Investing Indices (World Federation of Exchanges)

10 CSR Regulations in Mauritius (1) Mauritius introduced regulations for CSR in 2007 under the Income Tax legislation. Under regulations, types of projects approved for CSR in Mauritius are: Health Education & Training Leisure and Sports Environment Catastrophic Interventions & support

11 Regulation of CSR in Mauritius (2) Companies are required to submit their proposed CSR project for approval and there is a list of approved NGOs and Community Interest Groups with/through which businesses can implement their CSR initiatives. Opportunity was missed to allow companies to be innovative in how they embed CSR in their business, as against as an add on to their core business. Direct link not made between approved CSR projects and how they contribute to national development objects and Millennium Development Goals (MDGs).

12 Regulation of CSR in Mauritius (3) Missed opportunity for businesses to be active participants in national development, and for policy makers, businesses and civil society groups to impact positively on progress towards achieving the MDGs. System incurs additional costs to business (individual) and government (endowment foundation), through administering approval of CSR projects.

13 Beyond jobs created & size of FDI (traditional focus of policies promoting FDI ) Opportunities to leverage voluntary actions/practices of TNs in Foreign Direct Investment negotiations -Relevance of Millennium Development Goals (MDGs)

14 Botswana (Mining Sector CSR awareness) Philanthropy YES Triple Bottom Line Corporate Social Investment Business and Development -?? MDGs Vision 2016 and MDGs (population just under 2 million in 2008, sports groups, capacity building, community development, triple bottom line focus, government as shareholder & stakeholder)

15 Opportunities for Business & Development (policy issues Tourism in Belize) Capital investment in alternative energy (solar, hydro) Leverage investment with employment levels & infrastructure Procurement & Supply chain (local participation) Capacity building Empowerment OR low skill jobs. MDGs 1 (poverty), 7 (env sustainability), 8 (global partnership)

16 Policies that can create opportunities for businesses to contribute to Development in Botswana Capital investment in alternative energy (solar, hydro) Leverage investment with employment & infrastructure (incentives given to businesses setting up in areas of high unemployment and poor/no physical infrastructure). Procurement & Supply chain (local participation) Capacity building -empowerment with managerial skills, not just low skill jobs Health (e.g., Global AIDS Fund, driven initially by global businesses in sub-saharan Africa, then supported by the United Nations and philanthropic donations).

17 Enhancing the Impact of Voluntary OR Mandatory CSR -on investment and Development /MDGs Some businesses have begun to link what they do to specific MDGs, as applicable. Policy makers can leverage the CSR strategies of businesses, especially inward investors, to increase social, environmental and economic impacts. Examples of MDGs that are well-suited for such enhanced impact are: MDGs Goal 1 -Eradicate extreme poverty and hunger Goal 2 -Achieve universal primary education Goal 6 Combat HIV/AIDS, malaria and other diseases Goal 7 Ensure Environmental sustainability Goal 8 Develop a global partnership for development

18 Ways in which CSR strategies can be leveraged in investment negotiations (1) Development and/or maintenance of infrastructure Creation of jobs for young people and women Promotion of enterprise and community development in rural areas and remote communities Use of local raw materials in production processes. Veronica Broomes PhD September 2012

19 Ways in which CSR strategies can be leveraged in investment negotiations (2) Adding greater to raw materials Development of environmentally friendly technologies. Sustainable use of natural and extractive resources (incl. biodiversity, minerals,..) Accelerating progress towards achieving the MDGs Veronica Broomes PhD September 2012

20 Provide conducive policy frameworks for CSR to create Triple Wins for governments, businesses and communities. Government (policies) Business (investment) IMPACT ON DEVELOPMENT Communities (resources)

21 Have you reviewed your CSR strategy recently? *Are CSR activities in your company dominated by charitable giving/philanthropy? * What is your business case for CSR? * Will your company be investing in new markets soon? Then, contact us to discuss how to get greater value from your investment and create 'Triple Win CSR' strategies for your company. Tel: +44(0) E: admin@executive-solutions.co.uk