Corporate Social Responsibility

Prabuddh Banerjee

 At its best, CSR is defined as the responsibility of a company for the totality of its impact, with a need to embed societys values into its core operations as well as its treatment of its social and physical environment
Sir Geoffrey Chandler, Founder Chairman (Amnesty International Utl business group 1991-2001 and former senior executive Royal
Dutch/Shell Group)

The business climate is ever changing

Information revolution

Manufacturing Emigrate to low cost/standard areas Shift away from heavy manufacturing Clean up its act Energy & natural resources

Government requirements

Global standards

er sum s n Co tude i att

lS ba lo G a in ch up pl y

business

Improve social & environmental impact Greenhouse gas Financial Services More responsibility attitude to consumers Socially responsible investment Consumer products Brand reputation

Social environmental economics trends

Four Generations of Corporate Social Responsibility Drivers

Novo Intelligent Nordisk South African Breweries Engagers BP

Good Citizens

BAA Camelot Sainsburys

Reputationally Challenged Ethical Icons

1990

Shell Nike BAT

The Body Shop Ben & Jerrys Co-op Movement

2000

CSR and Sustainability Reporting State of Play

1999 35%

Global Fortune Top 250

2002

33%

12%

45%

0%

10%

20%

30%

40%

50%

HSE Sustainability/Social

1993 1996

13% 17% 24% 18% 5% 10% 15% 10% 20% 25%

Top 100s (in 19 countries)

1999 2002 0%

28%
30%

HSE Sustainability/Social

Maturing of CSR Standards, Guidelines and Regulation

FSC Ethical Trading Initiative OECD Guidelines for Multination al Enterprises Race to the Top MSC SA8000

European Commission White Paper on Corporate Social Global Responsibility ISO14001, EMAS Reporting Initiative Industry DEFRA Association Environmental Commitments Reporting UN World Summit Guidelines UN Global Compact UN Convention on Biodiversity AA1000 Framework and IIP Assurance Standard London Benchmarking Group Various Product Labelling Schemes

Increasing Investor and Rating Community Expectations

SERM FTSE4GOOD Growth in SRI funds Morley Sustainability Matrix

Dow Jones Sustainability Index

UK Pensions The Act Combined amendments BiE Index Code, the Turnbull and UK Company Law Higgs The Association of British Review Reports Insurers (ABI) guidelines BitC ISEAs Gradient Corporate (supply chain Responsibility benchmarking) Index

Taking an informed position on CSR Defining Aspirations and Appreciating Expected Benefits
Leadership Proactive Tactical Compliance

Protect Manage current risks Ensure access to resources Minimise regulatory costs

BRAND/REPUTATION DECISION MAKING

Enhance brand equity

Anticipate emerging risks & innovate Partnership solutions Enhanced access to capital

STAKEHOLDER RELATIONS OPEX & CAPEX

Corporate Social Responsibility 4th Generation Questions

Is it linked to business mission and strategic objectives? Does it inform commercial innovation and facilitate learning?
Business Policy & Objectives Governance Stakeholder Engagement

Does it protect and/or enhance the brand? Does it provide accurate, adequate and meaningful information to stakeholders? Does it ensure that CSR targets are met and aligned with business objectives?

KPIs

CSR Management Programme

Management Systems and Controls Assurance

Reporting

Does it improve core business processes (e.g. risk, stakeholder analysis)? Does it highlight operational/process inefficiencies?

Is it aligned with relevant standards (e.g. AA1000, GRI, ISO)?

Does it link with highest level of governance in the organisation?

Performance
CSR reporting and assurance
Per f orm Ga ance p
ve d ea L ip sh er

Comprehen sive Ad hoc

om C p

e nc lia

Risk of Exposure

ti ac ro P

ti ica un mm ap Co n G

l ca ti ac T

Reactive

Risk of Low Credibilit y Integrate

CSR Management

Assurance
Understanding the business
Clients business objectives and strategies Internal & External stakeholders

How the business fits together Clients (CSR) Report Risks associated with reporting (CSR related) information Management systems in place to control data generation and reporting

Remaining areas of uncertainty

Detailed evidence gathering

Independent Opinion

Improvement opportunities

External Assurance
Benefits Demonstrates credibility and transparency to stakeholders Hard cop
Lever to secure information quickly and in a particular format Catalyst for change

Challenge, support and broader perspective on developments

Social assurance allows

Shift from a focus purely on accuracy to adding further meaning for stakeholders Development of new principles, and re-definition of existing ones Consideration of forward looking indicators, not just past performance Recognition of broader governance processes; explicit about quality
stakeholder dialogue, management of risk, internal assurance

Assurance focused on hotspots where credibility needs to be enhanced

Social assurance allows

and encourages Iinnovative behaviour in auditor and auditee A continuous improvement mindset Stakeholder inclusive alliances to form

The Challenge
The future of quality reporting will lie with organisations that can transparently demonstrate a picture of their activities, policies, plans and capacities to deliver change in the future Dr Simon Zadek