Corporate Social Responsibility and Sustainable Competitiveness

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World Bank Institute
Corporate Social Responsibility and Sustainable
Competitiveness Djordjija Petkoski Lead
Specialist, World Bank April 2003 dpetkoski_at_worldb
ank.org
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Overview

• The World Bank and WBI
• Setting the stage and the Big Picture
• Corporate Social Responsibility and Ethics
• World Bank Institute
• Raising CSR IQs

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• The World Bank and WBI

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• World Bank Group key priorities
• PPoverty Alleviation
• GGood Governance
• GGood Investment Climate

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The World Bank as a whole has two faces we are
a lending Bank and a Knowledge Bank, positioned
at a major intersection in the knowledge economy,
connecting global learning opportunities with
investment assistance for local development. Our
role is that of facilitator, broker, connector,
catalyst WBI is our catalytic agent. James
D. Wolfensohn, President, The World Bank
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WBI creates learning opportunities for countries,
Bank staff and clients, and people committed to
poverty reduction and sustainable development.
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• Setting the Stage and the Big Picture

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Dynamic Change Rising Risk

• Technology, including the Internet and mass
  media.
• Globalization anti-globalization movement.
• Stronger civil society.
• Lack of trust in corporate America.
• Ira Millstein A new world of unprecedented
  scrutiny.
• Increased importance of CSR and supporting
  institutions.
• Terrorism.

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Beyond the Letter of the Law

• Corporations are vigorously held to account in
  the court of public opinion.
• Regulatory compliance is no longer enough.
• Facing countless gray areas
• Net of complex factors
• Standards are continuously shifting.
• At stake is a companys reputation.

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A Risk Grid

• Short-term risk financial market fluctuations
  brand-new technology loss of key customers or
  suppliers.
• Long-term risk demographic shifts impact of
  HIV/AIDS and poverty.
• Intrinsic risks inside the company.
• Extrinsic risks outside the company.
• ___
• Blue Ribbon Commission, Fall, 2002

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Risk Grid
Intrinsic Extrinsic
Long Term
Short Term
___ Blue Ribbon Commission, Fall, 2002
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Poverty and Developing Countries

• Today
• 3 billion people (survive on) under 2/day
• 1.2 billion people (survive on) under 1/day

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Population Growth
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Global Gross Domestic Product (GDP)

• Year 2000
• 30 trillion 5 billion people 20 global GDP
• Year 2050
• 140 trillion 8 billion people 40 global GDP
  (assuming 3.5 growth)

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Corporate Social Responsibility and Ethics
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Competitiveness
Corporate Social Responsibilities
Corporate Governance
Leadership and Values
Business Conduct/Ethics
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Importance of Ethics
The best chance you have of making a big
successis to decide from square one that you are
going to do it ethically - Alan
Greenspan Chairman, Federal Reserve Board
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Importance of Ethics
There is no such thing as business
ethics.Theres just ethics and we all have to
practice them every day in everything we
do. Peter Drucker
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CSR A New Paradigm

• To think comprehensively and systematically about
• The role of business in development
• The manner in which the business is conducted
• Corporate Governance
• Poverty alleviation
• Corporate contribution to peace and war against
  terror
• Business, government and civil society
  partnership- common ground and collective action

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Barriers to CSR

• A) Corporate Level
• Lack of leadership and vision
• Too much focus on short-term goals
• Inability to recognize opportunities
• Lack of entrepreneurial spirit and innovation

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Barriers to CSR

• B) Country/Society Level
• Lack of creative pressure from the government and
  civil society.
• Lack of support from the consumers
• Lack of peer support through business
  associations - reluctance of other companies to
  follow
• Lack of economic/market incentives

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(No Transcript)
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Examples Why we need Corporate Governance

• Russian Oil Firms

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World Bank Institute
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Tools

• Global E-Surveys
• Global E-Conferences
• Web-Based Courses (Global/Country Focus)
• Face-to-Face
• High-Profile Awareness and Consensus
• Action Plan

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E-Survey on Corporate Social Responsibility (US
546 World 2602)
Which of the following factors most affects
public impression of individual companies?
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E-Survey on Corporate Social Responsibility (US
546 World 2602)
Which of the following problems affects you, your
family and your community the most?
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E-Survey on Corporate Social Responsibility (US
546 World 2602)
What are the main constraints that make it
difficult for companies in your country to
address Corporate Governance, Corporate Social
Responsibility and Business Ethics issues in a
more systematic and effective way?
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E-Survey on Corporate Social Responsibility (US
546 World 2602)
Did you reward or punish companies in the past
year based on your perceived social performance?
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E-Survey on Corporate Social Responsibility (US
546 World 2602)
What is your preferred approach to strengthening
international safeguards and business conduct
codes?
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E-Conferences

• Global E-Conference on CSR, Education and
  Technology (Nov. 18 Dec. 7, 2002)
• WBI and the University of Michigan Business
  School E-Conference on Business, Democracy and
  Peace (Oct. 7 Nov. 1, 2002)
• WBI and Ethics Officer Association (EOA)
  E-Conference on Business Ethics and Corporate
  Accountability The Search for Standards (Sept.
  9 27, 2002)
• WBI and Inter-American Development Bank Americas
  E-Conference on CSR (June 10 July 5, 2002)
• Future Leaders E-Conference on CSR (March 18
  April 26, 2002)

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Web-Based Courses on Corporate Social
Responsibility

• 2550 participants/90 countries
• Key partners
• UN institutions UNDP, UN Global Compact, UNIDO,
  UN Staff College
• Academia Wharton School of Business, University
  of Michigan, Higher School of Economics (Moscow)
• Corporate world
• Civil society

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Raising CSR IQs
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Raising CSR IQs
ZMET/HBS
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(No Transcript)
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The fundamental obstacle to CSR is that we are
caged in our current ideas. This is a picture of
a man inside a prison with broken-down technology
computers, clothes, lamps, and all kinds of
things. If we stick with our current technology,
consumption, business model, and decision-making
models, this is where we will end up for sure.
ZMET interviewee
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(No Transcript)
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Guy going from one side of the canyon to the
other a lot of clouds like fog. The point is
going from one way of doing business to another
is very tough. Theres a lot uncertainty. It
takes a lot of skill, but we have to lift
ourselves beyond that, above the fog, and thats
not going to be a simple exercise. CSR is about
seeing the forest, the fog, and seeing how we can
get on the other side, and how we can be
well-equipped for doing that. So probably we
need to develop additional skills, knowledge, and
understanding. ZMET interviewee
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(No Transcript)
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We have some kind of salad with a human face
with a smile made with a hot pepper. So the
story is that in all of our implementation
challenges, we have to see that human face,
identify with it on the trees we are cutting
down, the fields we are destroying ourselves we
are hurting. With some kind of creative effort,
we can see that. Its not going to be all sweet.
This hot pepper will make our lives unpleasant
from time to time. But I think the overall
effect will be positive. ZMET interviewee
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(No Transcript)
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The message is that whatever we do today will
have an impact on future generations. Its not
just my kids or your kids or somebody elses.
Its future generations. We should not hope that
the walls we build to protect ourselves will be
tall enough to protect our children. Only with
very conscious effort we can make the world for
them a better place to liveeven if we address
our most selfish needs we have to address the
needs of the next generation. Thats what CSR is
about. ZMET interviewee
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Need for partnerships

• Businesses are discovering social values
• NPOs are discovering business principles
• A new thinking about partnership not an
  exchange but building relationships between
  business and NPOs. To find ways to make
  philanthropy serve the community and companys
  business objectives.
• The collaboration continuum
• Philanthropic (Charitable donor and recipient)
• Transactional
• Integrative
• For more details, see J.E. Austin The
  Collaborative Challenge Jossey Bass Publishers,
  2000

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Collaboration Continuum
From J.E. Austin, The Collaborative Challenge
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Creating partnerships

• What are you trying to accomplish through the
  collaboration?
• Where does your mission overlap with the
  potential partners mission?
• Do you and your potential partner share an
  interest in a common group of people?
• Do your needs match up with your partners
  capabilities, and vice versa?
• Would the collaboration contribute significantly
  to your overall strategy?
• Are your values compatible with your prospective
  partners
• From J.E.
  Austin, The Collaborative Challenge

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UN Global Compact Course Module

• Objective
• Increase understanding of Global Compact and main
  principles
• - Mission
• - 9 Principles
• Design
• What action is required from the businesses to
  meet the main principles of the Global Compact?
• - the business benefits to join
• - what companies need to do to qualify
• - what do the 9 principles mean to business?

Source UN Global Compact (2003)
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UN Global Compact Course Module

• Implementation
• Global Compact Performance Model to implement the
  principles
• The Global Compact mechanisms for engagement
• Learning Forum
• Policy Dialogues
• Local Networks
• Partnership projects

Source UN Global Compact (2003)
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UN Global Compact Partnership

• UN Global Compact and WBI are jointly organizing
• A Global Compact Module for the web-based course
  on Corporate Social Responsibility and
  Sustainable Competitiveness
• An E-Conference on The Role Of Business In
  Fighting HIV/AIDS, April 21- May 9, 2003
• The recommendations will be shared with
  decision-makers at the ILO and UNAIDS conference
  in Geneva, May 12-13, 2003

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Private Sector Perspective

• Corporate Social Responsibility is not a
  cosmetic it must be rooted in our values. It
  must make a difference to the way we do our
  business.
• Group Managing Director

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• You cannot talk about CSR unless you love your
  people and your country
• A student from Moscow, in opening remarks for a
  meeting on Russian Future Leaders and CSR, with
  Mrs. Wolfensohn.