dr. walter wehrmeyer centre for environmental strategy w...
TRANSCRIPT
Overview
• What is Corporate Social Responsibility, where does it come from?
• Why is it important?• CSR and Sustainable Development• CSR Guidelines and Principles
Environmental Management: A Brief History
• Very Early Beginnings• More recently, five distinct Phases:
– 1970s - ca. 1985s: Persistent Adaptation– 1985 - ca. 1994: Adaptation without Innovation– 1994 - 1996/7: Innovation– 1997 - ? Pressures towards Sustainable
Development– 1999 - ? Fragmentation and Industrial Ecology
So what is different today?
• There is a growing demand for Environmental Products
• Anticipatory Approach is desired (Precautionary Principle)
• The Environmental Problems have become:– Global– Complex– Long-term– Frequently irreversible– Structural / Systemic
Ethical Motives for Environmental Protection
• Narrow Utilitarianism
• Wider Utilitarianism
• Stewardship
Protect material resources for future use
Protect Earth because it provides essential services for us
Protect Earth from us, because we have a responsibility for our own actions
On Environmental Ethics…
“The environmental crisis is an outward manifestation of a crisis of mind and spirit. There could be no greater misconception of its meaning than to believe it is concerned only with endangered wildlife, human made ugliness and pollution. These are part of it, but more importantly, the crisis is concerned with the kind of creatures we are and what we must become in order to survive”From living in the environment, by G Tyler Miller
(Wadsworth: Belmont, California, 1992)
Traditional and developed Business Ethics Modes
• Economic Theory (1 Mode)– Profit maximisation leads to
efficient resource allocation– responsibility is to be profit
maximising– discharge of duty, if any,
through economic activity– Ethics or social or
environmental considerations are either in the price or not relevant
• Business Ethics Modes (Mintzberg)– Enlightened Self-Interest– Responsibility for its own Sake
(altruism?)– Sound Investment Theory– Avoidance of Outside
Influence
Corporate Social Responsibility• … the recognition and acceptance of the effect an
organisation has on society and its social environment and the impetus for action to mitigate adverse impacts and improve beneficial impacts?
• “...Companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”
EU Green Paper2001
Reactions to the EU Green Paper Consultation• Companies:
– Need to maintain voluntary nature, focus on SD; global level
– No “one size fits all”• Trade Unions and Civil Society:
– Voluntary initiatives are not sufficient, need for regulatory standard enforcing minimum standards
– No unilateral development, inclusive appraoch• Investors:
– Need to improve disclosure, transparency and measurement
• Consumer Organisations:– Need for complete and trustworthy information
regardings goods and services across their value chain
EU “Consensus” on CSR:• CSR is voluntarily adopted because businesses
deem it to be in their long-term interest;• CSR is linked to sustainable development:
businesses need to integrate the economic, social and environmental impact in their operations;
• CSR is not an optional ‘add-on’ to business core activities — but about the way in which businesses are managed.
Why Bother?
• Reputation• Competitiveness• Risk Management
• Ethical Integrity?
So, what should Companies do?
SWOT Analysis
Positive (+) Negative (-)
Strengths Weaknesses
Internal
Opportunities Threats
External
Environmental Positioning Model
“Environmental Exposure”
Low High
Indifference Defensive
Low
Offensive Innovative
High
Market
Oportunities
Another example
Sustainable Development
Sustainable Development is Development that meets the needs of this generation without compromising the opportunity of future generations to meet their own needs.
Brundtland Report, 1987
Sustainable Development
Sustainable Development requires us to provide rising real incomes to twice the current world population without undermining the productivity of the six vital ecological systems:– croplands– rangelands– forests– freshwater– oceans– the atmosphere
Sustainable Development and Corporate Social Responsibility
Natural andPhysical Sciences
Technologyand
Micro-Economics
Social Issuesand
Macro-Economics
Ecologicalsystem
Economicsystem
Socialsystem
Sustainable development
Sustainability TriangleFrom Sustainability 2000
Economy
Environment Social
Profit
EqualityNature
Eco-Efficient
SociallyResponsible
StakeholderCapitalism
CommunityDevelopment
Raisethe Bottom
SustainableEnterprise
NaturalCapitalism
Adapted by Stuart Hart from: McDonough + Partners
• The achievement of sustained and equitable development remains the greatest challenge facing the human race. (World Bank, 1999)
• Sustainable development is one of the slipperiest pieces of soap you are ever likely to find in the shower. (Peter Woodward, facilitator, Shell Expro SD workshop, March 2000)
• If you don’t integrate environment into your corporate strategies, your competitor will.
Michael Porter 1995
Current development paradigm
• From low income, low education, high birth rates and environmental degradation due to over-use of scarce resources
• To high income, high education, low birth rates and environmental degradation due to over consumption of resources
Sustainable Development and Corporate Social Responsibility
• Three main Dimensions:1. Environment2. Equity2. Futurity
Weak and Strong Sustainability: Different degrees of substitutability of resources.
Triple Bottom Line
• Economically viable• Environmentally sound• Socially responsible
Sustainable Development and Corporate Social Responsibility
Natural andPhysical Sciences
Technologyand
Micro-Economics
Social Issuesand
Macro-Economics
Ecologicalsystem
Economicsystem Social
system
Sustainable development
Economically Viable… (1997)
• The Economy of Mitsubishi is larger than that of Indonesia
• Combined sales of the world’s top 200 corporations are equal to 28% of global GDP
• From 1950 to 1990, global economic output grew from $3.8 trillion to $18.9 trillion (5X)
• In the same period, world trade rose from $308 bnto 3554 bn (11X)
Environmentally Sound…• Global CO2 emissions reached a record 23,900 mt in 1996 - 400 mt
more than 1995, four times that of 1950. Mean increase: 1.3% p.a.• Losses from natural disasters between 1986-95 were 8 times higher
than in 1960s• Estimated health costs of the 1997/98 forest fires in SE Asia is
$1,400 m• In 1996, 25% of the world’s (ca. 4630) mammal species and 11% of
the (9675) bird species were at significant risk of total extinction.• According to IPPC, Greenhouse gases will cause the Earth's
atmosphere to rise by 0.9 to 3.5 degrees Celsius by 2100• At current growth, by 2025 2/3 of the world population is likely to
live in water-stressed environments• We produce ca. 400 m t hazardous waste p.a., 300 m t in OECD
countries.
We need to decouple our Lifestyle from Economic Growth
• If you are starving, any food is a life saver.• If you are malnourished, any food with nutrients
you lack is good• If you are adequately nourished, more freshness,
variety, subtlety, taste, elegance in your food are nice.
• If you are overfed, more food is bad for you.(Thanks to Roger Levett)
Decoupling oil and economic growth
“In the past…for every one percentage point rise in the rate of growth, there would be another one-point rise in the oil consumption. Then that factor (the energy co-efficient) came to 0.5 to 1. But in Europe in the year 1999/2000 you have a rate of growth averaging around 2.5 per cent and the rate of energy growth is below zero. In the US they had a rate of growth of 4.9 per cent with consumption up only about 50,000 bpd.”
Interview with Sheik Yamani reported in The Observer, Sunday January 14, 2001.
Socially Responsible… (Equity)• Annual GNP per capita in the 10 poorest countries was at $159, in the 10
richest countries, it was 188 times as much, $29,922 (at 1995 prices);• The national GNP of the 10 richest countries was 750 times more than that of
the ten poorest countries; In 1960, the difference in per capita income between the richest and poorest countries was 3:1. By 1997, it reached 74:1. Within countries, inequality of income distribution is rising nearly everywhere.
• 42% of people (993 million) in the 46 countries classified as Low-Income lived on less than $1 per day. 1159 m people (22%) live on less than $1 / day;
• The assets of the top three billionaires are more than the combined GNP of all least developed countries and their 600 million people;
• Per capita CO2 emissions in the 46 Low-Income countries was 771 kg (1992 data), those in the 26 High-Income countries were 10,512 kg, 13.6 times as much. A similar ratio could be found for per capita waste production;
• The 1996 per capita commercial energy consumption in industrialised countries was 5388 kg oil equivalent, compared to 300 kg oil equivalent in the least developed countries.
World Development Report 1999
Typical activities
• “Declare high level management leadership and commitment;• Developing corporate principles and codes of practice;• Implement principles / policies through management systems;• Establishing / implementing procurement criteria and support for
certified products;• Reduce the environmental ‘footprint’ of operations / products;• Setting targets for social and environmental performance;• Set investment criteria for the pension funds;• Work with local community groups;• Educating consumers on product usage and stewardship; and• Reporting, increasingly with independent assurance, on risk
management, progress towards targets and benefits.”ABI, Investing in Social Responsibility 2001
Principles for Business
• Business must act as a responsible global player/citizen
• Business/Government/Civil Society in balance to achieve outcomes
• Businesses are communities of people• The Planet must thrive for people and
business to thrive Western Mining Corporation
Sources of Guidance
• Codes of Conduct (Global Compact!)• Management Standards• Accounting requirements and standards• Labelling / Labels• Reporting standards (Pension funds)
• Investment markets?
Guidelines Cover• Disclosure• Industrial Relations• Environmental protection• Bribery• Consumer Interest• Competition• Taxation• Implementation Procedures
OECD Guidelines
• General Principles– Contribute towards sustainable development.– Respect the human rights of those affected by their
activities– Encourage local capacity building– Encourage human capital formation, esp employment
and training– Refrain from bribery– Good corporate governance principles and practices.– Trust between enterprises and the societies.– Allow whistleblowing– Encourage others– Abstain from any improper involvement in local politics.
SA 8000
• CEPAA initiative• Sets standards for
– Child labour – Forced labour – Health and Safety – Freedom of association
and the right– to collective bargaining – Discrimination – Disciplinary practices – Working hours – Compensation
• ILO, UN support
– Avon Products, Inc. [USA] – Amnesty International – Otto-Versand [Germany] – KPMG Peat Marwick [USA] – The Body Shop [UK] – Sainsbury's [UK] – University of Texas [USA] – Abrinq Foundation [Brazil] – International Textile Garment and
Leather Workers' Federation [B]– Grupo M.S.A [Dominican Republic] – Amalgamated Bank [USA] – Reebok International [USA]– Toys ‘R’ Us [USA] – Ethical Trading Initiative [UK] – Eileen Fisher Inc. [USA] – SGS-International Certification Services [CH]
Conclusions
• National differences in CSR and Consensus– Social Norms– Acceptability of the “Corporate World”
• CSR built upon the traditional economic theory of the firm is unlikely to succeed
• Global Trend, but so far, we are nowhere near achieving the Triple Bottom Line
• What type of organisation do we want?– Which signals can be sent?