The third generation agenda in CSR: the challenge of getting things done

Transcription

1 The Center for Interuniversity Research on the Analysis of Organizations (CIRANO) and the Department of Economics of l'école Polytechnique de Paris The third generation agenda in CSR: the challenge of getting things done Corporate social responsibility and firm performance Montreal, November Partner PwC Chile

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3 The evolution of the CSR Agenda FIRST GENERATION SECOND GENERATION Installing CSR, Sustainability, and Sustainable Development in the public debate Profits and Ethics Transparency and Sustainability Reporting. A profound cultural change: Environmental awareness Sustainability moving: from strategy and operations, to an integral part of products and services. Need for Transparency throughout the supply chain supported by policies and control mechanisms Businesses converging in their conception of the first generation issues Progress in linking sustainability indicators to TBL results Source: Perera & Griffiths (2007) The Challenge in Corporate Social Responsibility: Getting things done Source: Gai, E. (2006) Sustentabilidad Corporativa - Creación de valor para el accionista

4 Sustainable Economy Dialogue Process Source: Sustainable Economy Dialogue Report ( Changes in Social and Cultural Values Misleading measures Cost externalisation Lack of Education Governance Failings Failings of the Current Economy Divided Purpose Inappropiate Incentives Human Weakness New Organization metrics Better governance Structure Education Measures Long-termism Sustainable More Finance Responsibility Short term Focus Unfair Distribution Business The Actions Third Generation Agenda Promoting Builiding sustainability Sustainable values Values Disciplines Promotion Integration Clearer Reporting of Equity purposes Changed Strategy New Full Cost Systems Incentives CredibilityAccounting Fulfilling Accessible Diverse Innovative Inclusive Farsighted Goals of a Good Economy Participatory Developing Equitable Sustainable Getting Things Done Changes in Political and Economic Policies Nov Slide 4

5 Third Generation Topics: The embedding into everyday business practices or getting things done 1. Strategy 2. Structure 3. Organization 4. Systems 5. Promoting Sustainable Values 6. Sustainable Finance 7. Disciplines Integration 8. Measuring 9. Reporting 10. Credibility

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7 Strategy From Theory to Practice STRATEGY CSR starts at the foundations: the BOARD OPERATIONS Everybody s responsibility EVALUATION Implementing Balance ScoreCard REWARDS Rewarding and Remunerations systems

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9 Structure Where the CR function sits Structure follows Strategy Legal Marketing Community Affairs Operations External Affairs Corporate Affairs HR Standalone dept. Corp. Communications 0% 5% 10% 15% Fuente: MELCRUM Chief Sustainability Officer?

10 Structure CSR structuring HOW CR functions operate? Externalized In-house agency model Highly centralized Somewhat decentralized Highly centralized Somewhat centralized 0% 10% 20% 30% 40% Fuente: Melcrum / n=589

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12 Organization CSR organization chart: Structural options BOARD Source: (adapted) Existing Board Member New Director (CSR expertise) Existing Board Committee New Board Committee Entire Board EXECUTIVE LEVEL Existing Manager New Manager Existing Executive Committee New Executive Committee Entire Executive committee CSR focused department MANAGEMENT AND SPECIALIZED CSR TEAM Separate specialized departments Within Business Units Within geographic regions CROSS-FUNCTIONAL ORGANIZATION By specific skill sets CSR Committee (senior staff) with CSR responsibilities Team formed to focus on specific CSR topics Team formed to focus on specific tasks or outcome CSR charter added to existing cross functional committee

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14 Systems Role of IT in CSR PORTALS - APLICATIONS Communicate CSR information to all stakeholders: user friendly & actionable way INTERCOMPANY COMMUNICATION SYSTEMS BUSINESS INTELLIGENCE SYSTEMS Integration with business partners Consolidation & data presentation Getting Things Done TRANSACTION SYSTEMS FUENTE: Paul Griffiths: Using Technology to facilitate CSR Implementation Data collection at the source for CSR metrics Slide 14

15 Systems Many available tools Challenge: Integrating in the core of information flow Pág. 15

16 Promoting Sustainable Values Pág. 16

17 Promoting Sustainable Values Extending Sustainable Values Fair Trade Compliance Supply Chain Integration Suppliers Transport Manufacture Warehouse Delivery Sales Consumer

18 Sustainable Finance Pág. 18

19 Sustainable Finance Equator Principles PRI Ethical Funds SRI CO2 Market An economic phenomenon: Finally we are talking about figures New financing sources Oportunities of lower cost of capital

20 Sustainable Finance Responsible Investment Phenomenon Negative Screening Positive Screening TBL incorporation into investment analysis Participation /Activism Fuente: John Russell: In the Public Interest

21 Sustainable Finance Concepts implicit in an old Equation > Present Value = n i=1 Fi (1+r) i LONG TERM HORIZON FOR FLOWS MANTAINING OR GROWING FLOWS, and REDUCING RISKS

22 Disciplines Integration

23 Ecosystems, IRR, Biodiversity, NPV Worklife balance Income Taxable? Risks Humand Rights Controls CO2 GAAPs Emissions / IFRS Product Cost Safety Reductions & Security ERP Pág. 23

24 Environmental Impact Assesment Show me figures Engaging Stakeholders How much does it cost? Social investments How long does it take? Creation of Value and Distribution of Wealth What for? Integration of differents views Pág. 24

25 Measuring Pág. 25

26 Measuring New Reporting Frameworks Company s information Non Financial Information Sector Information Generally accepted principles

27 Measuring WEALTH GENERATION + REVENUES - DIRECT COSTS Domestic Foreign GENERATED VALUE ADDED WEALTH DISTRIBUTION People + Government + Financing Agents + Community & Environment + Reinvestment + Shareholders DISTRIBUTED VALUE ADDED Slide 27

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29 Reporting Towards Integrated Reporting ISO A Global Compact AA1000

30 Reporting Information users redefined Investors Media Associates Specialized Consumers Banks Auditors We, the people The Informed Crowds Financial Analysts Regulators Business Partners NGO

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32 Credibility Providing Public Trust In new business areas Fuente: Value Reporting

33 Credibility ASSURABILITY DIMENSIONS SCOPE LIMITED REASONABLE ASSURANCE COVERAGE SYSTEMS PROCESS INFORMATION P R I N C I P L E S A complex and AA1000 diversified combination of possibilities ISAE3000

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36 The common driver of third generation topics: Embedding CSR into everyday business practices and as a result Getting things done! Thank you luis.perera@cl.pwc.com