Corporate Social Responsibility

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Corporate Social Responsibility
Kirsten Schmidt May 2005
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Today

• Introduction to CSR
• Communicating CSR
• Assignment I
• Stakeholder relations
• How companies in the electronic sector work with
  CSR
• Why should electronic engineers care?
• Assignment II

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1. UNs Global Compact

• Global Compact is a soft regulation framework
  based on a set of core values
• Supports sustainable development (economic,
  social and environmental aspects)
• Supports implementation of international
  agreements also in countries with
  less-developed legislation
• Voluntary approach based on commitment from the
  participants
• Group pressure and self-control

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Global Compact Drivers for companies

• Improving image and reputation
• Improving understanding of and relations to
  stakeholders
• Practical solutions to global challenges
• Sharing good practices and learnings

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Global Compact The 10 Principles (I)

• Human Rights
• To support and respect the protection of
  internationally proclaimed human rights
• To avoid complicity in human rights abuses
• Origin The Universal Declaration of Human
  Rights adopted in 1948
• Equality
• Life and security
• Personal freedom
• Economic, social and cultural freedoms

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Complicity in many forms

• Direct complicity- a company knowingly assists
  in violating human rights
• Beneficial complicity- a company benefits
  directly from human rights abuses committed by
  someone else
• Silent complicity- the failure by a company to
  raise the question of human rights violations in
  its interactions with stakeholders

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Global Compact The 10 Principles (II)

• Labour rights
• To uphold freedom of association and the
  effective recognition of the right to collective
  bargaining
• To eliminate all forms of forces and compulsory
  labour
• To abolish effectively child labour
• To eliminate discrimination with respect to
  employment and occupation
• Origin ILOs Declaration on Fundamental
  Principles and Rights at Workfrom adopted in
  1998 by the yearly tripartite International
  Labour Conference (governments, employers and
  workers from 177 countries)

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Global Compact The 10 Principles (III)

• Environment
• To support a precautionary approach to
  environmental challenges
• To promote greater environmental responsibility
• To encourage the development and diffusion of
  environmentally friendly technologies
• Origin Declaration of Principles and an
  International Action Plan (Agenda 21) emerging
  from the Earth Summit in Rio de Janeiro in 1993

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Global Compact The 10 Principles (IV)

• Bribery and corruption
• To combat corruption, extortion and bribery
• Origin The United Nations Convention against
  Corruption adopted in 2004
• This last principle was added in December 2004
  and further guidelines and cases are under
  development

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2. GRI Global Reporting Initiative

• GRI is a voluntary, holistic framework for
  reporting on sustainable development
• Independent organization started in 1997
• Ambition to create the reporting standard within
  this field - replacing national or
  sector-specific guidelines- facilitate
  comparison between reporting organizations
• Today, the GRI-database contains well over 600
  reports for download
• Promoting exchange of experiences as well as a
  certain discipline and self-control
• Working together with the UN Global Compact

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International standards on (C)SR

• SA 8000
• National standards
• ISO 26000 under development

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Assignment I

• In relation to your coming careers as engineers,
  discuss the following aspects
• What are the elements of the 4 basic areas in
  the Declaration of Human Rights (Equality Life
  security Personal freedom Economic, social and
  cultural freedoms)?
• In which ways do you think these aspects will
  influence your professional life, positively and
  negatively?
• Discuss examples on silent complicity -
  personally or cases you have heard of

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3. Stakeholder relations

• Definition of stakeholders
• Any groups or individuals who can affect or is
  affected by the corporation
• Two types of stakeholders
• Market stakeholders
• Non-market stakeholders

Source A. Lawrance (2005) Business and Society
Stakeholders, Ethics, Public Policy
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Market stakeholders

• Those that engage in economic transactions with
  the company as it carries out its primary purpose
  of providing society with goods and services
• Employees
• Customers / users
• Suppliers
• Shareholders
• Retailers/wholesalers
• Creditors

Source A. Lawrance (2005)
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Non-market stakeholders

• People or groups who although they do not
  engage in direct economic transactions with the
  company are affected by or can affect its
  actions
• Communities
• NGOs/activist groups
• Media
• Business Organisations
• Governments and Transnational Bodies
• The General Public

Source A. Lawrance (2005)
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Stakeholder analysis asks four questions

• Who are the relevant stakeholders?
• What are the interests of each stakeholder?
• What is the power of each stakeholder?
• How are coalitions likely to form?

Source A. Lawrance (2005)
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4. How companies work with CSR

• Different focus around the world
• Global markets and supply chains- Dilemma I
  Creating and loosing jobs- Dilemma II Dealing
  with different cultures
• Codes of Conduct external and internal
• Development of products and markets

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Electronics and CSR Background

• One of the most globalised sectors
• Highest growth rates in the manufacturing
  industries
• Accounts for around 1/3 of the world merchandise
  trade
• Severe job cuttings in the MNCs since 2000 in
  USA, Japan, Europe- moving of jobs to other
  countries- economic recession- slow-down in
  development speed
• (Source ILO sector report on Mechanical and
  Electronic Engineering, 2002)

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Electronics and CSR Some problems

• Poor working conditions and discrimination
  towards women
• Constrained freedom of association and
  representation
• Poor application of international labour
  standards
• Hazardous working conditions
• War on Coltan in the Democratic Republic of Congo
• Contamination of land and groundwater supplies
• E-waste is one of the fastest growing waste
  streams
• Hazardous waste trafficking
• Lawsuits and non-compliance
• (Source CoreRatings, Analysis of financial risks
  in electronics retailers and their supply chain,
  2003)

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Code of Conduct in the Electronics sector

• Signatories adhere to implement and promote
• Labour standards (The Declaration of Human
  Rights, Social Accountability International,
  Ethical Trading Initiative)
• Health safety standards (OHSAS 18001, ILO
  Guidelines on Occupational Safety and Health)
• Environmental standards (ISO 14001, EMAS)
• Management System (i.e. OECD Guidelines for
  Multinational Enterprises, Corporate
  governance)
• Ethical standards (I.e. UN Global Compact, UN
  Conventions)

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The Sustainability Charter of ETNO - The European
Telecommunications Network Operators Association

• Corporate Social Responsibility is the business
  contribution to making sustainable development
  happen, through the proactive management of a
  companys environmental, social and economic
  impacts
• To be implemented via
• Sustainable provision of products and services
• Integration of environmental, social and economic
  responsibilities in the business activities

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Areas in the ETNO Sustainability Charter

• Awareness of potential positive and negative
  impacts
• Regulatory compliance as a minimum
• Support research and development
• Procurement of green products produced under
  humane conditions
• Accountability information and stakeholder
  relations
• Cooperation with relevant stakeholders
• Management systems to secure responsibility and
  continuous improvements
• Employee relations - maintain and develop the
  workforce

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SONYs internal Code of Conduct

• General standards (Compliance Stakeholder
  relations Appreciating diversity Avoiding
  conflicts of interest Communication of
  concerns)
• Respect for Human Rights (Equal opportunities
  Forced labor/child labor Sound practices Work
  environment)
• Conducting Business with Integrity and Fairness
  (Product and service safety Environmental
  conservation Fair competition and procurement
  Advertising Disclosures Personal information
  Gifts and entertainment Intellectual property
  Confidentiality Recording and reporting of
  information)
• Ethical Personal Conduct (Insider trading
  Personal conflicts of interest Corporate Assets
  Media relations and public statements)

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Development of new products and markets

• Many if not most - products are developed to
  meet the needs of highly industrialized countries
• Where are the new markets? And in which ways do
  they differ?
• Infrastructure
• Large volumes / small volumes
• Technical complexity, maintenance
• Capacity of the users (money, skills,
  knowledge,)
• Resources and waste
• Cultural, religious, local traditions and values
• Etc

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5. Why electronic engineers should care

• Global job markets and competition- focus on
  efficiency- room for new challenges
• Working conditions- High/low degree of
  influence
• New needs and markets challenge your professional
  and personal skills
• You are the ones to design future solutions

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Assignment II

• You work for a Danish company producing advanced
  power supply systems.
• There is a potentially new market for you in
  producing mobile systems to be used in hut areas
  after natural catastrophs like earthquakes,
  tsunamies etc.
• In the planning process for development of your
  new system you have to consider the following
  aspects
• What are the interests of the main stakeholders
  in relation to functionality, pricelevel,
  quality, operation? (use the matrix). Consider
  both the design, implementaton and operational
  phases. Are there any potential conflicts?
• Pay special attention to the users and the local
  community where the system should function. Are
  there any social, cultural, religious etc.
  aspects to be aware of? (You may think of
  Indonesia after the tsunami). Could you benefit
  from co-operating with other experts? Who, for
  example?
• Set up recommendations to the designers that will
  facilitate the installation and use of your power
  supply system.