CSR and ESG – in spite of the

recession?

CSR and ESG – in spite of the

recession?

Professor Hans De Geer, TI Sweden, SSERiga

Tallinn, April 24, 2009

Professor Hans De Geer, TI Sweden, SSERiga

Tallinn, April 24, 2009

License to operate …License to operate …

NGO’s (CSO’s)

CSR

CG

Financial markets

Politics

Business

Media

members

voters

Savers/investors

Employees

customers

…stakeholders’ expectations

InitiativesInitiatives

UN

ILO

OECDEU ICC

GRI

CAUX

Rio

ISO

Standardisation of expectationsthrough”soft regulation”

Globalcompact PRI

ActivityActivity

NGO’s (CSO’s)

CSR

CG

Financial market actors

Political actors Business

Media 1

2

3

4

BusinessBusiness

• CSR - no longer if but how• 98 % of top 150 companies in Europe addresses CSR on their website, 73 % of top 600.

• CSR – the idea that corporations have a responsibility for social and environmental issues that goes beyond their core activity, beyond ”ordinary decency” and beyond regulation

• Linked to the concepts of ”embeddedness” and ”sustainability”

• Crises,close downs and lay offs makes CSR even more demanding!

• CSR - no longer if but how• 98 % of top 150 companies in Europe addresses CSR on their website, 73 % of top 600.

• CSR – the idea that corporations have a responsibility for social and environmental issues that goes beyond their core activity, beyond ”ordinary decency” and beyond regulation

• Linked to the concepts of ”embeddedness” and ”sustainability”

• Crises,close downs and lay offs makes CSR even more demanding!

1

Arguments against CSRArguments against CSR

• CSR is just window-dressing and blue wash!

• “The business of business is business” (Milton Friedman).

• Macroeconomic waste (Dave Henderson).• Business’ first social responsibility is to be profitable and create jobs!

• CSR might lead to protectionism.

• CSR is just window-dressing and blue wash!

• “The business of business is business” (Milton Friedman).

• Macroeconomic waste (Dave Henderson).• Business’ first social responsibility is to be profitable and create jobs!

• CSR might lead to protectionism.

Arguments for CSRArguments for CSR• Production has in fact negative effects that businesses have an obligation to take care of.

• Big corporations do have resources.• Public sector failure. • CSR – the business case

– Risk management– Reputation management and brand building

– Values based leadership

• Production has in fact negative effects that businesses have an obligation to take care of.

• Big corporations do have resources.• Public sector failure. • CSR – the business case

– Risk management– Reputation management and brand building

– Values based leadership

PoliticsPolitics

• Financial crises: Unsound managing of risk in structured products >systemic dependencies >domino effects

• Politicians take the initiative back• Reregulation of markets – towards a new Bretton Woods?

• Recession: state intervention & support of failing industry

• Still: climate issues - high priority during Sweden’s EU presidency

• Financial crises: Unsound managing of risk in structured products >systemic dependencies >domino effects

• Politicians take the initiative back• Reregulation of markets – towards a new Bretton Woods?

• Recession: state intervention & support of failing industry

• Still: climate issues - high priority during Sweden’s EU presidency

2

NGOsNGOs

• NGOs - the opaque sector: lack of transparency

• From confrontation to alliances

• NGOs - the opaque sector: lack of transparency

• From confrontation to alliances

3

Financial marketsFinancial markets

• Friedman’s argument• Institutional owners• ESG issues• Growth of SRI

– 2005 - 2007: 102 % in 13 European countries (Eurosif)

– 18 % of total assets– € 2,7 quintillion– PRI as support structure

• Friedman’s argument• Institutional owners• ESG issues• Growth of SRI

– 2005 - 2007: 102 % in 13 European countries (Eurosif)

– 18 % of total assets– € 2,7 quintillion– PRI as support structure

4

Issues remain Issues remain HR

WR

E

C

Child labour increases

The supply chain:Lay offs here or there?

Climate - and water issues

Corruption increases:Greed as a system

and calls forand calls for

• The ethics of lay offs• The ethics of increasing social differences

• The ethics of risk management• The ethics of systems of remuneration

• The fight against corruption

• The ethics of lay offs• The ethics of increasing social differences

• The ethics of risk management• The ethics of systems of remuneration

• The fight against corruption