and in Cambodia Véronique Salze-Lozac h Regional Economic Program Director, The Asia Foundation

Transcription

1 Corporate Social Responsibility and Economic Governance in Cambodia Véronique Salze-Lozac h Regional Economic Program Director, The Asia Foundation 1

2 Definition Proactive Management: Organizations and enterprises take responsibilities for the IMPACT of their activities on customers, suppliers, employees, shareholders, communities, other stakeholders and the environment; Beyond the statutory obligation to comply with legal requirements Voluntary step to improve the business/working/ environment, minimizing the negative impact on the company's social and physical environment, while providing a competitive return to investors 2

3 Concept Managing the business processes to produce an overall positive impact on society Source: 3

4 Approaches The Compliance Approach: Companies react mainly to pressure from buyers, investors or Government and focus on: - corporate governance - risk management - compliance with laws and regulations Possibly adding philanthropic efforts The spirit of CSR approach: Company go beyond compliance. Innovative measures in: - employee relations - environmental sustainability - governance and transparency - stakeholder engagement, etc. 4

5 Trends Corporate Social Responsibility A growing movement across the world Alignment with business objectives CSR activities are being aligned more closely with business objectives and capacity, with the resulting choices generally being more strategic t and corporate-oriented, and less driven by executive discretion. Globalization Globalization of CSR rhetoric and expectations is increasing, with transnational companies carrying CSR practices to their bases of operation worldwide. Doing more with less Companies are increasingly challenged to leverage their efforts and impact through creative and strategic use of non-financial resources (e.g., employee volunteers, in-kind contributions). 5

6 Trends 2005: 85% of senior executives and institutional investors believe that CSR is a central or important consideration in decision making Ref: The Importance of Corporate Responsibility The Economist Intelligence Unit, 2005 Ultimately the real test of CSR is that companies start putting more effort into measuring and transparently reporting on their CSR initiatives. To date, 25% of Global Fortune 500 companies prepare a social and/or environmental report. 6

7 Trends CSR aligned with business objectives and capacity CSR not a cost but an in investment CSR as a Comparative Advantage CSR MAKES GOOD BUSINESS SENSE Ref: Making Good Business Sense (World Business Council for Sustainable Development) 7

8 For Large Enterprises A Comparative Advantage 1. Business image and brand reputation At the international level: Customers are becoming increasingly demanding Price/Quality/ Reputation (intangibles) At the national/local level: A strong strategy and reputation as a responsible business can help companies build trust with local stakeholders thereby establishing a local license to operate 2. Access to markets - More and more buyers and consumers are socially-conscious i - Some countries may link access to their market to basic CSR compliance (e.g. Garment sector) 8

9 Large Enterprises 3. Attract multinational partners 4. Access to international sources of capital 5. Enhanced Human Resource management Progressive labor relations as a way to enhance productivity and reduce costs associated with labor disputes, recruitment and turnover 9

10 For Small and Medium Enterprises A Comparative Advantage CSR translates ates into Quality and Reputation 1. Business image and reputation - Good perception within the community, at the regional and/or national level - Visible and known 2. Markets - A reputation helps keep your customers - Helps you reach out to new customers and new markets (trust) - CSR as a marketing tool 10

11 SMEs 3. Credibility in your interaction with others Clients, suppliers, potential partners, government officials. 4. Access to loans 5. Enhanced Productivity Good labor relations as a way to enhance productivity it and reduce costs associated with lack of motivation, labor disputes, recruitment and turnover 6. Sustainable production Natural resource management (including for farmers, fishermen, micro-enterprises) 11

12 Country Level Maximizes the value of wealth creation to society Market-based drivers can help Government get the labor and environments laws enforced Guarantees of good labor and environment standards can help national economic competitiveness strategies - Good standards are increasingly required by buyers, investors and project financers - Included in free trade agreements or systems of trade preferences (WTO bilateral agreements) - Decreases risks of labor disputes - Enhances labor capacity to be more productive - A visible commitment to CSR can help attract new FDI or reach new markets 12

13 Areas for Actions What CSR can mean for Cambodia Governance: sound governance, ethical conduct of staff and managers, transparency of operations, no conflicts of interest, compliance with listing rules, compliance with corporate law Risk Management: organizational health & safety, product safety, regulatory compliance, reputation management, responsible business practices, stakeholder engagement Value Chain: responsible procurement, supplier management, externalizations of costs, supplier screening, supplier feedback, fair trade 13

14 Areas for Actions Social: human rights, community engagement, philanthropic activities, charitable donations, staff volunteering, social benefits, local capacity building, social investment Employees: turnover, morale, satisfaction, work-life balance, internal culture (transparency), labour practices, job security, remuneration, diversity, equal opportunity, training Environment: environmental footprint, waste & pollution avoidance, eco-efficiency, product recycling, sustainability, greenhouse gas emissions, resource reduction, precautionary principle Measurement: GRI (Global Reporting Initiative) reporting, internal & external audits, verification statements, t t management targets t 14

15 Challenges & Options Promoting CSR in Cambodia Creating a supportive Legal Environment -Developing e a legal and regulatory framework (e.g.: competition law, IPR ) - Implementing laws and regulation - Developing effective business dispute resolution schemes Developing a culture of transparency and consultation - Improved access to information - Building the capacity of the private sector to be more proactive - Public-Private Dialogues (national and sub-national level) 15

16 Building CSR competencies Challenges & Options - Public Sector: training on CSR across Ministries and Departments - Private sector: Developing the capacity of Chambers of Commerce, Associations - Reinforce independent think tanks, research institutes, etc. - Civil Society Adapting CSR to SMEs Most enterprises in Cambodia are SMEs CSR should work for them too Adopting environmental good practices - Business efficiency best use of valuable raw materials cost and risk management - Sustainable and balanced economic growth 16

17 A National Framework Why a national framework? To build a framework for verification that will allow government and business to demonstrate that practices in the country are consistent with the evolving expectations of the global marketplace To build trust and transparency Examples in Cambodia: Better Factory (ILO) Clean Business Initiative (PACT USAID) 17

18 A National Framework Key pillars of a national framework for Cambodia 1. Standards and Guidelines - National standards in line with international guidelines for improved visibility and efficiency - Transparent procedures and clear implementation guides - Sector specific guidance (garment, construction, agrobusiness, tourism ) - Certification system 2. Information Dissemination, Training & Education - Dissemination of information (businesses, workers, government officials, customers) and multinational buyers - Industry-wide educational efforts to educate management and workers on standards and practices 18

19 3. Implementation and verification A National Framework Self-Assessment: - Baseline assessment tools for enterprises - Role of business associations, Chambers of Commerce External Verification from third Party: - According to standards - Based on a set of actions agreed between Cambodian government, local and multinational enterprises, expert agencies, and other stakeholders. - Core actions to include records review, confidential employee discussions, visual observation, and production process review - Reporting provided to individual enterprises being reviewed, industry association, and government officials Government Enforcement: - Targeted government enforcement (transparent criteria and processes) - Collaborative efforts with enterprises and third party verifiers to improve verification processes 19

20 A National Framework This verification would provide critical information to four key constituencies: i (a) for enterprises, a basis for checking and improving internal assessments; (b) for multinational buyers, to provide assurances that enterprises are meeting their expectations concerning social and environmental performance; (c) for public officials, allowing them to determine legal compliance and determining how to deploy scarce enforcement resources; (d) for the public, to demonstrate transparency for increased efficiency i and transparency 20

21 Two examples from The Asia Foundation Activities 1 - CSR as a company s philanthropic effort to positively impact the community 2 - CSR as a macro-economic issue: Business environments as basis for CSR practices and improved country s competitiveness 21

22 Example from CHINA Support of Migrant Workers An Asia Foundation Levi Strauss Foundation CSR Partnership 22

23 Background Millions of rural women migrate to China s manufacturing hubs every year; Most of them are b/t years old, single, with primary or secondary-level education; They work on assembly lines for 12 hrs/day under difficult or hazardous conditions; They lack access to critical social services; unadapted to their new environment 23

24 Activities Levi Strauss Foundation - The Asia Foundation since 1999 Mobile health services: Lectures, roundtables and seminars for migrant women on HIV/AIDS awareness, health care, self-esteem, and hygiene Legal aid centers: 10, copies of legal rights handbooks, more than 2600 legal consultations for migrant women Education and counseling centers: Training on small-business establishment, career development as well as nursing or computer training Peer learning and policy advocacy 24

25 Results A Levi Strauss Foundation s investment of Over $1.6 million The Foundation expanded the activities to reach: + 850,000 women factories in 22 cities 25

26 Impact for the company The Levi Strauss-funded programs received high visibility in China; The programs were covered by local and international media; The programs have led other corporate entities to support projects providing necessary services for workers; 26

27 Other Examples Microsoft provided grants totaling $360,500 for the establishment of a Computer Technology Learning Centers in Guangdong; Macy s Inc. and Wal-Mart Corporation supported scholarship programs for women to attend vocational schools and universities; Boeing Company provided seed money for migrant workers to develop their own small business; Western Union provided support for pre-departure projects for women preparing to go and work in factories. 27

28 CSR and Economic Governance: for an improved business environment 28

29 The Provincial Business Environment Scorecard (PBES) A Measure of Economic Governance and Regulatory Policy 29

30 PBES The PBES examines economic governance (counterpart at the country level of CSR) 2006: 10 provinces 2009: All 24 provinces in 2009 Using 10 basic criteria It highlights the importance of conducive business environments at the local level From the perspective of the private sector 30

31 10 Sub-Indices 1. Entry Costs: Ease of business registration and licensing 2. Access to Land: Level of property rights 3. Transparency: Access to documents, laws, and information necessary to business; Consistency of application of provincial policies 4. Time Costs of Regulatory Compliance: Taxes, customs, inspections 5. Informal Charges: Scope, predictability of Informal Charges 31

32 10 Sub-Indices 10 Ind dica ators 6. Participation: Firm or business association participation 7. Crime prevention: Costs of crime or prevention 8. Tax Burden: Scope, consistency of Tax Burden 9. Provincial Pro-activity and Dynamism: Attitude, flexibility 10. Dispute Resolution: Type of disputes, mechanisms used 32

33 PBES Results 2006 Kampong Cham Svay Rieng Kampong Chhnang Kampot Kandal Battambang Banteay Meanchey Phnom Penh Siem Reap Sihanoukville Final PBES Score (100 Point Scale) Entry Costs Transparency Time Costs Crime Prevention Proactivity Property Rights Participation Informal Charges Tax Administration Dispute Resolution Data generated from Provincial Business Environment Survey 2006 Kampong Cham has the best business environment 33

34 PBES Results 2006 Banteay Meanchey Battambang Kampong Cham Kampong Chhnang Kampot Kandal Phnom Penh Siem Reap Sihanoukville Svay Rieng Perfect Entry Costs Property Rights Transparency Time Costs Crime Prevention Proactivity Tax Administration Dispute Resolution Participation Economic Governance Indices 34 13

35 What For? VISIBILITY: attracts attention on business environments and variations across provinces/municipalities, stresses differences in implementation INFORMATION: Which province is more supportive? Where are the strengths and weaknesses?... INCENTIVE for REFORM: Local authorities are on the spot, gives credibility to the private sector request for improved business environments (strengthen th the demand d for reform) TOOL for ACTION: Identify and prioritize priorities, exchange about best practices, develop action plans, target policy reform MONITORING TOOL on the perception of improvements and successes. 35

36 Concluding Remarks CSR as a joint responsibility Private sector side: Within the enterprise In its relationships with clients, suppliers, subcontractors, etc In its interaction with the community Public sector side: Legal Framework Implementation and Control Conducive Business Environment 36

37 Concluding Remarks It requires: Considering CSR/good governance as a way of doing business (including for SMEs) More private sector engagement in public policy and in the community Enhanced transparency, dialogue and accountability (public and private sectors) To Create a culture of CRS in Cambodia For a more balanced and competitive economy 37

38 Thank You 38