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CSR, SME Development, and the Role of Public
Policy

• towards socially and environmentally
  sustainable industrial development

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Table of Contents

• What is CSR Scope
• UNIDO CSR Programme and Service Portfolio
• Relevance of SMEs to CSR and CSR to SMEs
• CSR and Public Policy

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I. WHAT IS CSR?
? the private sector's contribution to
sustainable development
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Definition of CSR (ISO 26000)

• responsibility of an organization for the
  impacts of its decisions and activities on
  society and the environment, through transparent
  and ethical behaviour that
• contributes to sustainable development, health
  and the welfare of society
• takes into account the expectations of
  stakeholders
• is in compliance with applicable law and
  consistent with international norms of behaviour
  and
• is integrated throughout the organization and
  practiced in its relationships.

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Context

• CSR is a concept/approach developed in the
  developed world and may not be readily applied in
  the context of transition and developing
  countries
• CSR mainly focused on big companies and developed
  countries so far (e.g. OECD Guidelines)
• Global CSR agenda to date has failed to
  sufficiently address SMEs, except as part of the
  supply chain of large corporations
• Public policies have failed to sufficiently
  leverage CSR for sustainable development

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II. UNIDOS CSR PROGRAMME

• Micro-level Direct support to a group of SMEs
  belonging to the same sector, region, cluster,
  supply chain, etc. (pilots for training of
  experts and case building).
• Meso-level Assistance to business support and
  advisory institutions to foster the uptake CSR
  concepts in their sphere of influence.
• Macro-level CSR related policy advice to support
  government institutions in determining what
  public policies best support a countrys private
  sector in its efforts to apply socially and
  environmentally responsible business practices.

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Service Portfolio

• Capacity building and upgrading (REAP)
• Pilot CSR interventions in SMEs (REAP)
• Establishment of CSR centres and networks
• Inclusion of CSR in the curricula of business
  schools and vocational training institutions
• Promotion of ethical business principles through
  business associations (advisory, codes of
  conduct)
• Preventing corruption to foster SME development
• CSR research (public policy, SME dimension,
  corruption)
• Integration of CSR in government strategies

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III. RELEVANCE OF SMEs TO CSR
Economic Social Environmental
gt 90 of enterprises 50-60 of employment 70 of industrial pollution
Support resilient economic systems ? linkages between large small firms Livelihood opportunities through simple value-adding processing activities in agriculturally based economies Over-represented in industrial sectors with high environmental impacts
Seed beds for innovation Important providers of jobs for young people Produce an important share of overall industrial waste
Strong association between economic growth and SMEs SMEs tend to employ more of the disadvantaged groups Do less than larger companies to address their environmental impacts
Balanced mix between large and small firms ? overall competitiveness On-the-job training for poor people who would otherwise lack access to formal education and vocational training Many emerging firms in the sustainability sector are SMEs or engaged in value chains with many SMEs
Enhance competition entrepreneurship More labour intensive production processes  
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Relevance of CSR to SMEs

• Direct supply chain relationships supplier codes
  (HS, labour rights, environmental management)
• Development of legislation and policy
  Indonesias law on CSR, UK Minister for CSR, EU
  Green Paper, CSR policies in Slovakia, Lithuania
  and Nigeria
• International standardization certification
  schemes SA 8000, ISO 14001, OHSAS 18001, ISO
  26000 upcoming

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Drivers for CSR in SMEs

• Policies of TNCs
• International standardization certification
  schemes
• Development of legislation and incentive schemes
• Pressure from stakeholders
• Strong linkages to communities

Export oriented SMEs
SMEs selling on the local market
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? REAP

• CSR based management reporting tool for smaller
  companies
• Aligning economic, social and environmental
  aspects of business (TBL)
• Disseminated via a network of trained and
  qualified national CSR experts
• REAP consists of methodology (training package)
  software

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REAP allows for

• Assessment of SMEs CSR performance
• Implementation of CSR principles (in line with a
  companys core business strategy, productivity
  considerations, operational costs savings and
  enhanced market access)
• Marketing and positioning of SMEs in global value
  chains
• Thorough implementation of Responsible Supply
  Chain Management on local supplier level
  (cooperation with TNCs)
• Standardized reporting for global benchmarking
  and assessment of SME suppliers and partners
  worldwide

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REAP Dissemination Structure
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Thai companies (textile sector)

• Options implemented
• Good housekeeping improvement in working
  practice used for yarn connection
• Better process control and optimization of
  production activities reduction of power
  consumption from new elevator usage policy
• Better working conditions payment by objectives
  and targets

• Gains improvements
• Up to 75 reduction in waste yarn (cost savings
  of THB 396,000/year) time savings increased
  productivity
• Reduction of greenhouse gases by 48 t /year
• Reduction in worker turnover rate empowerment of
  teamwork higher production efficiency
  (productivity rose from 600 pieces/worker/months
  to 900) increased morale better working
  conditions at no cost for implementation

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IV. CSR Case Studies (REAP)
Indian companies (leather sector)

• Gains improvements
• Saving of up to INR 310,000/year
• Improved quality of product
• Reduction in costs/unit and rejection
• Reductions in electricity consumption water
  consumption (30) TDS load (30) solid waste
  generation (20)
• Improved working conditions at shop floor
  reduced risk of accidents improved health
  conditions higher motivation amongst workers

• Options implemented
• Better process control optimization of
  production activities
• Changes in the equipment
• Better working conditions
• Reduction of input raw material
• Recycle, reuse and material recovery

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Establishment of CSR Centers Networks

• Reaching a critical mass of enterprises requires
  a coordinated approach ? UNIDO assists
  governments in the establishment of CSR Centers
  and Networks at national and regional level.
• Develop an approach to CSR that addresses
  particular common problems of firms in one
  country or region ? cooperation and coordination
  among different institutions
• Stakeholders to learn from best practice examples
  and experiences of companies or institutions with
  similar cultural, social and economic contexts.

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Example CSR Network in CEE/SEE
National Focal Point Institution Country D
National Focal Point Institution Country A
Network Coordinating Institution
Global Compact local network
University
Business association
National Bureau of Standards
National Focal Point Institution - Country B
National Focal Point Institution Country C
NGO
Business leaders forum
Vocational training institution
Chamber of Commerce
BDS
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IV. CSR AND PUBLIC POLICY

• Objectives and Challenges
• Establishing minimum legal standards and
  regulations for business performance and
  enforcing these
• Encouraging and rewarding the uptake of socially
  responsible forms of business practices by
  enterprises large and small.
• Aligning business activities and public policy to
  achieve societal goals.
• Supporting/leveraging relevant industrial
  activity and business practices to achieve
  developmental goals.

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? Options to integrate CSR into public policy and
government strategies

• Clear and comprehensive assignment of
  responsibility
• Better coordination and involvement of all
  relevant stakeholders
• Promote awareness and dialogue
• Identifying those government priorities where the
  private sector could make a significant
  contribution and develop strategies/policies to
  encourage such behaviour
• Demonstrate responsible behaviour on the part of
  the government (procurement, state-owned
  enterprises)

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? More information

• http//www.unido.org/csr
• n.weisert_at_unido.org

THANK YOU!!