Chapter15-social responsibility of global firm - Philippelasserre ...

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Chapter 15

The social
responsibility of the
global firm

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What is corporate social responsibility (CSR)?



It concerns how business enterprises relate to
and impact upon society’s needs and goals




It is also concerned with the firm’s operational
behavior and its impact on surrounding society




It goes beyond philanthropy and compliance with
the law


Source : Unctad, The Social Responsibility of Tansnatioonal Corporations, WIR, 1999

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Are global corporations bad global citizens?



Destruction of the Ozone Layer



50% of the
emission

of greenhouse gases



Persistent organic pollutants



P
ollution
-
intensive mining, refining and
smelting of metals



Unsustainable agriculture



Deforestation



Over
-
fishing



Human rights



Non
-
respect of normal
labor

practices



Corruption



Political backing of repressive
regimes



Dual standards


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Bribe Payers Index (BPI)

(
From 0 = high level of bribery to 10 = negligible)






Low propensity

to bribe

High propensity

to bribe



8.1

United States

9

8.1

Singapore

9

8.1

France

9

8.5

Australia

8

8.6

Japan

5

8.6

United Kingdom

5

8.6

Germany

5

8.7

Switzerland

3

8.7

Netherlands

3

8.8

Canada

1

8.8

Belgium

1

5.9

Russia

22

6.5

China

21

6.6

Mexico

20

6.8

India

19

7.4

Brazil

17

7.4

Italy

17

7.5

Taiwan

14

7.5

South Korea

14

7.5

South Africa

14

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Corruption Perception Index

(
C
PI)

(
From 0= high level of
corruption

to 10 =
highly clean)

Low corruption

High corruption









1



Denmark



1



New Zealand



1



Singapore



4



Finland



4



Sweden



6



Canada



7



Netherland



8



Australia



9



Switzerland



10



Norway













9.3



9.3



9.3



9.2



9.2



8.9



8.8



8.7



8.7



8.6





168



Angola



168



Equatorial Guinea



170



Burundi



171



Chad



172



Sudan



172



Turkmenistan



172



Uzbekistan



175



Iraq



176



Afghanistan



176



Myanmar



178



Somalia



1.9



1.9



1.8



1.7



1.6



1.6



1.6



1.5



1.4



1.4



1.1



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Corruption and development

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Causes of corruption


Administrative

resource allocation



Lack of institutional

checks and balances and
information



Insufficient funding

of public services



Social and cultural

factors



Abundant
natural resources

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Effects of corruption

Direct effects


Discourages

domestic and foreign indirect investment


Skews

public capital expenditure


Reduces the productivity

of public investments and reduces the collection of
taxes

Indirect effects



Reduction in work productivity as a result of
demotivation


Dislocation

of social fabric


Loss of integrity

inside the bribe
-
giving companies


Corruption money is often linked to
criminal and terrorist activities

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Anti
-
corruption measures
for the public sector




Issue and implement
anti
-
corruption legislation




Adopt human resource policies

based on transparency of recruitment, fair
remuneration and adequate education




Establish an
enforceable code of conduct

for public employees




Set up transparent, open and fair
public procurement procedures




Simplify regulations

and procedures and limit or suppress administrative


authorisations in the hands of single officials




Set up a system of
transparent reporting and control




Do not allow tax reductions

for non
-
transparent monetary transfer
s

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Public endorsement

of anti
-
corruption measures



Clearly articulated
written policy

prohibiting any paying of or receiving bribes

and ‘kickbacks’



Implement the policy

with due care and take appropriate disciplinary measures



Provide
training
for employees to carry out the policy



Record all transactions

fully and fairly and conduct internal audits to assure

that all payments made are proper



Report annually

on the firm’s bribery and corruption policy



Have the annual report in line with the above
audited

Anti
-
corruption measures
for the private sector


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Require all agents

of the firm to affirm that they have neither made nor will make
any improper payments



Require all suppliers

of the firm to affirm that they have neither made nor will make
any improper payments



Establish a
monitoring and auditing system

to detect any improper payments



Report publicly

any solicitations for payments



Establish a system

to allow any employee or agent to report any improper payment
without fear

Anti
-
corruption measures
for the private sector

cont.

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Economic pressures on biodiversity

Sector



Direct pressures




Indirect pressures

Positive

Negative

Positive

Negative


Agriculture and
plantation forests




Creation of
diverse
ecosystems



Support for
biological
functions




Ecosystem conversion
to agriculture or forest



Fragmenting habitats



Introduction of non
-
native species




Maintenance of
ecosystem services,
enrichment of
biological diversity in
some cases




Pollution of ecosystems
through farm chemical run
-
off



Genetic homogenization
through monoculture use



Erosion, siltation, etc.

Fisheries



Destruction of habitats
through damaging fishing
practices



Potential over
-
fishing of
target species or by
-
catch
species



Introduction of non
-
native species



Pollution of marine and
freshwater ecosystems
through effluent discharge,
excessive nutrient and
chemical loading
(aquaculture), noise, etc.

Source: OECD (2001), OECD
Environmental Outlook
, Paris

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Sector



Direct pressures



Indirect pressures

Positive

Negative

Positive

Negative


Natural forests




Habitat loss or
fragmentation through
forest clearing and
infrastructure
construction




Pollution of forest
ecosystems through
effluents and noise



Erosion and associated
effects



Colonization of natural
areas facilitated through
infrastructure and access
provision

Oil production



Pollution of ecosystems
through spills



Destruction of
ecosystems through
infrastructure
construction



Decrease
dependency on
renewable natural
resources (e.g.
wood, fuel)



Reduced resource
extraction through
recycling



Pollution of ecosystems
through extraction (e.g.
effluents, noise, etc.)

Economic pressures on biodiversity
cont.

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Sector



Direct pressures




Indirect pressures



Pollution of ecosystems



Loss of habitat through
infrastructure development


Industry



Water conservation,
measures beneficial to
ecosystems


Creation of special
habitats

Water and
sanitation



Pollution associated with
transport use, including
greenhouse gas and air
pollution emissions



Bringing people to
conservation sites,
increasing awareness



Facilitating access to fragile
ecosystems, fragmenting habitats,
pollution



Use of land for transport
infrastructure



Water pollution and over
-
use
destroying habitats and
ecosystems

Transport and
related
infrastructure



Pollution of ecosystems
linked to use of inputs in
extraction (e.g. effluents,
noise, etc.)



Pollution through leaching etc.



Habitat destruction through
infrastructure construction


Mining

Negative

Positive

Negative

Positive

Source: OECD (2001), OECD
Environmental Outlook
, Paris

Economic pressures on biodiversity
cont.

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Source: OECD (2001), OECD
Environmental Outlook
, Paris

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Source: OECD (2001), OECD
Environmental Outlook
, Paris

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Source: OECD (2001), OECD
Environmental Outlook
, Paris

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Some answers



In Rome…




What is legal can be done




Competitive forces




Unproven evidence




Corporations are economic agents and it is


not their duty to substitute governments




PR campaigns




Lobbying

We do not acknowledge the notion of social

responsibility as defined by some NGOs.

….We comply with the laws of countries.

Brian Flannery

Science Strategy and Programs Manager

Exxon Mobil, Nov 2000

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Actions

Collective

Corporate

Fight

Proactive

Lobby

Finance research

Advertise

Deny

Advertise

Threaten?

Report

Audit

Plan

Target

Participate in

clubs, roundtables

Codes of conduct

Governments

Block

Passive

Legislate

(Anti
-
Corruption Acts)

Initiate international

agreements

Fund international

organisations

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Reduce material intensity



Reduce energy intensity



Reduce waste dispersion



Enhance recyclability



Make maximum use of renewables



Extend product durability



Increase service intensity

Eco
-
efficiency actions

Source

Lehni:

Eco
-
efficiency: creating More Value with Less Impact,


World Business Council for Sustainable Development, Geneva, 2000

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Business value from sustainable development

High

Low

Low

High

As trust diminishes, the demand for transparency

in the form of assurance mechanisms increases

“Trust me”

Trust

Transparency

“Tell me”

“Show me”

The move to the “Show me” world


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Research conducted in 2001 on a sample of the 996 largest global corporations

showed that:


1 out of 3

publish environmental and social information


4 out of 10

enforce worldwide minimum environmental standards


1 out of 10

conduct a systematic financial analysis of their
environmental policies and measures (e.g. “full cost pricing”)


1 out 3

monitor environmental performances for most of their
operations


6 out of 10

have implemented environmental and social policies


1 out of 2

have at least partially adopted an EMS (Environmental
Management System) including objective setting, measurement,
reporting and performance evaluation for environmental performances


1 out of 2

have a code of conduct valid for all employees

Practices

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Annualized

return

Dow Jones Global
World Index (DJGI)

US$

Dow Jones Global
Sustainable Index
(DJSI) US$

1 year

-
7.17%

-
2.77%

3 year

18.59%

19.01%

5 years

-
1.47%

-
1.66%

10 years

7.6%

4.45%

Socially responsible investing: doing well by doing good?