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Transcript of 1174471336einfuehrung Csr China
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Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Multinational Corporations andCorporate Social Responsibility
The New Responsibility of the Corporation
Introduction to the Seminar CSR in China, SS 2007
Prof. Dr. Andreas SchererProf. Dr. Andreas SchererIOU/University of Zurich
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2Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Whats the role of business in society?The old school approach
By pursuing his own interest [the individual] promotes that ofthe society more effectually than when he really intends topromote it. Adam Smith, (1723-1790)
Corporations are persons under the law deserving "equalprotection." Supreme Court decision Santa Clara County v. the SouthernPacific Railroad Corporation (1886)
What is good for General Motors is good for the country Charles Wilson, CEO GM, 1952
The only social responsability of a company is to increase itsprofits and nothing else. Milton Friedman, Nobel prize winner 1970
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3Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The mainstream neoliberal economic theory(Milton Friedman)
1. Only human beings have a moral responsibility for theiractions.
2. Managers responsibility is to act solely in the interest of
shareholders, they are agents of their principal(= economic actor).
3. Social problems have to be solved by the state (= politicalactor).
4. Confronting corporations with social demands beyond
profit maximization is a first step towards communism.
5. Managers who invest money in CSR steal the property of
their principals and impose a kind of privat tax
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4/344Prof. Dr. Andreas Scherer
IOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The social responsibility of the corporation is toincrease its profits?
We adhere to the rules. If the government set up the rules, we adhere to
them. It's like the tax code. No one expects you to pay more taxes than you
owe. And so you're expected to interpret the rules and conduct your business
in that fashion.
Jeff Skilling, CFO Enron
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5/345Prof. Dr. Andreas Scherer
IOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
A definition of CSR
CSR is a concept whereby companies integrate socialand environmental concerns in their business operationsand in their interaction with their stakeholders on a
voluntary basisDefinition of the EU commission
Corporate Social Responsibility is the continuingcommitment by business to behave ethically and contributeto economic development while improving the quality of life
of the workforce and their families as well as of the localcommunity and society at large
Definition of the World Business Council for SustainableDevelopment
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6/346Prof. Dr. Andreas Scherer
IOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
One step further: Old School CSRCarrolls Pyramide of CSR
Economic
Legal
Ethical
Philanthropic DesiredBe a good
corporatecitizen
ExpectedBe ethical
RequiredObey the law
RequiredBe profitable Economic
Legal
Ethical
Philanthropic DesiredBe a good
corporatecitizen
ExpectedBe ethical
RequiredObey the law
RequiredBe profitable
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7Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The changing expectations and the risingstandards
Management without morality?
Bodo Schnabel: a cheat?
Dennis Kozlowski: a tax evader and thief?
Thomas Haffa: a confidence trickser?
Percy Barnevik: a greedy pensioner?
Frank Quattrone: an inside trader?
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8Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The changing expectations and the risingstandards
Politics
Economy Civil Society
The power of politics shrinks.
Powerlessness creates distrust and people start to look aftertheir interests on their own.
= globalization from below (Giddens), subpolitics (Beck),paragovernmental activities (Dryzek)
Political PressureLaw
Political Pressureby Non-Governmental-Organizations (NGOs)
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9Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Lilliput against GulliverCorporations under NGO-pressure
January 2002: Der underwear-producer Triumph is forced by
the activist group Clean Clothes Campaign to close its new
production plant in Myanmar (former Burma).
Accusation:
Triumph is a profiteer of
the military dictatorship.
Systematic violations ofhuman rights.
... as already Pepsi, Reebok, BAT and Heineken.
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10Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The naked organization
Rearch results from www.google.de,
Nike, 20. February 2002
Hits 1 - 3: Nike`s official Homepages
Hits 4 - 6: Anti-Nike Websites
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11Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The new soft and hard law on the global playingfield The rules of the game are changing
CSR Europe (ww.csreurope.org)
CSR Europe is a company-network with the objective to promote profit, sustainable growth andsocial progress by anchoring CSR in the daily business.
European Union (http://europa.eu.int/comm/employment_social/soc-dial/csr/)
Green paper of the European Commission as a draft of general conditions for Europeon the social responsibility of companies.
UN Global Compact (www.unglobalcompact.org)
Initiative of the Secretary-General of the United Nations, Kofi A. Annan.He calls on companies to follow the principal guidelines in the domains of human rights,labor conditions and environmental issues.
Global Reporting Initiative (www.globalreporting.org)
Network of companies, NGOs, trade associations, UNEP, and CERES to develop general and globalapplicable guidelines for CSR reporting.
SA Intern. (www.cepaa.org)
Organization of companies and NGOs to establish the workplace standard SA 8000 which contains
all relevant employee rights and allows a third party certification.
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12Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Corporations as political actors
Some empirical observations: Corporations start to behave as if they
were political actors and assume genuine political responsibilities.
They engage in:
- Public health
- Education
- Social security
- Human rights protection
- Fight against AIDS, malnutrition, illiteracy, homelessness
- Promotion of peace and stability
- Creation and self-enforcement of regulation
- ...
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13Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Domains of Corporate Social ResponsibilityThe new corporate pragmatism
1. Self-Regulation
a. Siemensbreaks Apartheid-laws in South Africa
b. BPlauches a human rights initiative in cooperation with the US- and UK-
governments
2. Participation in political discourses
a. Betapharminitiated a law for social medical aftercare that will enter theGerman Code of social law.
b. BPtakes a public position in favour of the Kyoto protocol
3. Infrastructural investments
a. SAPsupports research at universities
b. C & A initiate and support orphanages, schools and vocational training inthird world countries
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14Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
While it might have been easy to lose track of our social andenvironmental goals under increased pressure to perform better
financially, we have continued to sustain our progress. Cyrus F. Freidheim, CEO Chiquita
The growing interest of business in CSR
Being trusted to meet societal expectations is essential forlong-term profitability. Sir Mark Moody Stuart, CEO Anglo-American
Auswchse der kurzfristigen Shareholder-Value-Orientierungwerden wieder durch nachhaltiges Wirtschaften ersetzt Klaus-Peter Mller, CEO Commerzbank
P iti I t f CSR B i
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15Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Positive Impact of CSR on BusinessPerformance
Source: Harris-Fombrun Reputation Quotient
Corporate
Reputation
SocialResponsibility
Bu i ld s tak eho lde r so l ida r i t y
I nc rease sales
Gain m arke t l eade rsh ip
A t t r a ct / Se cu r e t a l en t
Dr i ve bus iness g ro w t h
Earn i nv est o r con f i dence
A credible and consistent CSR management drives thecorporate reputation and brand equity of a company and
thereby supports the overall business success
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16Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR The motivation behind the engagement
react to pressure/avoid pressureNike, Nestl, Shell, Orange, BAT,
WestLB, Puma, Adidas, Gap, TommyHilfinger, Coca Cola, Karstadt
build reputation Microsoft, SAP, UBS, Daimler Chrysler,Deutsche Bank, ratiopharm, McKinsey,
live corporate values
HP, BMW, BP, Migros, Unilever, Altana,Merck, Faber Castell, Starbucks, C & A,Bertelsmann, DM Markt, Novartis, Johnson &Johnson, Otto,
1
2
3
avoid CSR Schlecker, Aldi, DeBeers, Unocal, JapanTobacco,
4
CSR as a reaction to pressure
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17Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR as a reaction to pressureThe Brent Spar Case
June 1995: Shell UK had the intention to sink the oil platform Brent
Spar. A consumer boycott reduced the turnover of Shell service
stations in Germany up to 50%. The reputation of the company
has been damaged significantly.
A company can not win a battle against a coalition of NGOs,
mass media, politicians and customers.
More and more consumers are ready to consider a companys
social and environmental engagement in their buying decisions.
Legal is not legitimate.
CSR as reputation building
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18Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR as reputation buildingThe Krombacher rain forest project
Joint initative with WWForganized in an independentfoundation
Rain forest project is the first
environmental project launchedby a corporation (in Germany) Sie geniessen, wir spenden
Total donation up to June 2004:2,3 Mio. Euro
Advertising at 4000 sales points,radio promotion, inclusion ofcelebrities (Gnther Jauch,Steffi Graf), rain forest partysweeps
Krombacher increased its salesin 2003 by 7.3% despite thedifficult market context
CSR as a reaction to pressure
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19Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR as a reaction to pressureAnalyzing the ethical risks of ones business
General Reputation RisksGeneral Reputation Risks
Torture Disappearances Harrassment of Human
Rights Defenders Denial of Freedom of
Assembly and Association Forcible Relocation Systematic Denial of
Womens Rights Forced/Bonded Labor Forced/Bonded Child Labor Arbitrary Arrest and
Detention
Torture Disappearances
Harrassment of HumanRights Defenders
Denial of Freedom ofAssembly and Association
Forcible Relocation Systematic Denial of
Womens Rights Forced/Bonded Labor Forced/Bonded Child Labor Arbitrary Arrest and
Detention
Industry-specific ReputationRisks
Industry-specific ReputationRisks
Access to drugs Intellectual Property
Rights Clinical Tests End-use of Products through
other parties Indigenous Rights Contamination
Process and Product Safety Employee Health and
Safety Environmental Protection
Access to drugs Intellectual Property
Rights Clinical Tests End-use of Products through
other parties Indigenous Rights Contamination
Process and Product Safety Employee Health and
Safety Environmental Protection
The example of the pharmaceutical
and chemical industries
Human rights
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20Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Human rights The key driver of the CSR debate
The ILO estimates that about 246 million children worldwide work under conditions thatcan be defined as the worst forms of child labor prostitution, mining and slave labor indifferent industries.
Mutilated workers in a world
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21Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
without social security
mutilated workersin China
According to the ILO 2 million work-related deaths occur annually, most of them in Asia
Mutilated workers in a world
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22Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Tang Shuzhen erreichteShenzhen am 12. Februar 2000.Sie war 18. Ihr erster Job fhrtean eine Maschine, mit der
Kabelstrnge verdrillt wurden,eine sehr gefhrliche Maschine.Manchmal sprangen die Drhtewie Peitschen aus den
Halterungen und schlugen tiefeWunden, manchmal gerietenMdchen mit den Haaren insRderwerk und verletzten sich
schwer. Der Spiegel 6/2005
Mutilated workers in a worldwithout social security
Sl l b
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23Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Slave labor
Anti-Slavery Internationalestimates that virtually all of the chocolate sold in the United Statescontains at least some cocoa which was harvested by slaves. In the Ivory Coast, the West
African nation that produces nearly half of the world's cocoa, boys as young as 9 are sold or
tricked into slavery, and forced to perform the hot, hard labor of cocoa harvesting.
According to the ILO 20 million people worldwide are in bonded or slave labor
CSR as a value commitment
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24Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR as a value commitmentHewlett-Packards engagement
HP started an initiative against toxice-trash dumping in Guiyu, China.
They support strict legislation thatmakes PC companies bear thecosts of disposing of discardedcomputers
Focus of CSR engagement: e-inclusion
Aim: Bridging the digital divide to the developing world , e.g. in India, South Africa
HP initiates and orchestrates public private partnerships with NGOs,
governments, citizens and other corporations
Proactive engagement: Privacy as a key future issue of HP CSR
CSR as a value commitment
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25Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
CSR as a value commitmentBen & Jerrys The Pionieers of the CSR business
Icecream company founded by two old hippies in 1977
First social performance report in 1989 (third partyvalidation included)
7.5 % of profit goes to charitable causes
Early engagement in fair trade and bio
1988 a new non-profit initiative known as 1% For Peace,goal: to redirect 1% of the national defense budget to fund
peace-promoting projects and activities.
1990 introduction of Rainforest Crunch ice cream. Sales ofthe ice cream benefit rainforest preservation efforts
1990 introduction of Chocolate Fudge Brownie ice cream. Thebrownies come from a bakery that employs disadvantaged peoplefrom the local community.
2000: Bought by Unilever
2001 completes transition to Eco-Pint packaging
Ben
Jerry
Named forGratefulDeadguitaristJerryGarcia
Chiquita: from a bad boy to a CSR leader
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26Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Starting Point:
Notorious for human rights violations, environmental pollution and thecollaboration with repressive regimes in the banana republics . A hugepressure on their brand and the attempt to hide their problematic behavior from the
public and their markets was considered as a failure. 1997 new CEO, 1998 decision to change andimplement a CSR strategy
Result:
Chiquita turned antagonistic stakeholder relations in collaborative ones
Chiquita is applauded by its strongest critics
Chiquita today is state of the art in CSR
For leading European retailers Chiquita has become a preferred supplier
Criteria of success:
Supply chain and core business oriented approach
Sensitivity vis--vis the societal environment
Value orientation
Top Management as driver and process-owner
Engagement was not reduced while Chiquita filed for chapter 11 in 2001
Extreme transparency
Adoption of the most critical standards developed by NGOs
Chiquita: from a bad boy to a CSR leader
The CSR process at Chiquita
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27Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The CSR process at Chiquita
Create a problem-awarenessat top management level
Understandsocietal change
CSR atChiquitaFormulate aCSR Vision
Formulatecore values
Start achange process
Anchor change
Some voices from critical NGOs
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28Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
The company began documenting
everything that went on at their
farms, from the number of treesplanted to the number of accidents
that occurred, to the number of
pounds of pesticides sprayed, to the
number of pesticides and otherchemicals that they have eliminated
through improved technology,
improved practices and improved
chemical compounds. RainforestAlliance
Chiquita continues to impress. The
transparency of its corporate
responsibility reporting and the use
of highly respected independent
observers combined with some real
progress on the ground is a track
record which is unmatched in our
work in Latin America. While the
road is long, Chiquita has traveled
far in a few short years. US Labor
Education in the Americas Project
Some voices from critical NGOs
Nike: The Five Stages of OrganizationalL i (Z d k HBR (D ) 2005 127)
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29Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Learning (Zadek HBR (Dec) 2005, p. 127)
Stage Defensive Compliance Managerial Strategic Civil
Whatorgani-
zationsdo?
Deny practices,outcomes, or
responsibilities
Adopt a policy-based
complianceapproach as acost of doingbusiness
Embed thesocietal issue in
their coremanagementprocesses
Integrate thesocietal issue
into their corebusinessstrategies
Promote broadindustry
participation incorporateresponsibility
Why they
do it?
To defend
against attacksto theirreputation thatin the shortterm couldaffect sales,
recruitment,productivity,and the brand
To mitigate the
erosion ofeconomic valuein the mediumterm because ofongoingreputation and
litigation risks
To mitigate the
erosion ofeconomic valuein the mediumterm and toachieve longer-term gains by
integratingresponsiblebusinesspractices intotheir dailyoperations
To enhance
economic valuein the long termand to gain first-moveradvantage byaligning strategy
and processinnovations withthe societalissue
To enhance
long-termeconomic valueby overcomingany first-moverdisadvantagesand to realize
gains throughcollective action
The Four Stages of Issue Maturity(Zadek HBR (Dec) 2005 p 128)
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30Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
(Zadek HBR (Dec) 2005, p. 128)
Stage Characteristics
Latent
Activist communities and NGOs are aware of the societal issue.
There is weak scientific or other hard evidence. The issue is largely ignored or dismissed by the business community
Emerging
There is political and media awareness of the societal issue.
There is an emerging body of research, but data are still weak.
Leading businesses experiment with approaches to dealing with the issue.
Consolidating
There is an emerging body of business practices around the societal issue.
Sectorwide and issue-based voluntary initiatives are established.
There is litigation and an increasing view of the need for legislation.
Voluntary standards are developed, and collective action occurs.
Institutionalized
Legislation or business norms are established.
The embedded practices become a normal part of a business-excellencemodel.
The Civil-Learning Tool(vgl Zadek HBR (Dec) 2005 p 129)
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31Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
(vgl. Zadek HBR (Dec) 2005, p. 129)
Latent Emerging Consolidating Institutionalized
Civil
Strategic
Managerial
Compliance
Defensive
Higher-Opportunity Zone
Risky Zone
Between marketing and commitment
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32Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Enron was regarded as state of the art in CSR
Existing tools of analysis that analyze corporations from outside, can not differentiate
between real CSR and bluewashing/greenwashing CSR
All big corporations use more or less the same tools and methods in CSR
The biggest criminals often have the largest CSR reports
How can we ever identify the good corporate citizens?
before afterwards
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Core questions for testing corporate commitment
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34Prof. Dr. Andreas SchererIOU, University of Zurich
Universitt ZrichIOU/Institut fr Organisation und Unternehmenstheorien
Core questions for testing corporate commitment
1. Are they moving quickly enough?
2. Are they committed to applying CSR values broadly across allaspects of their business?
3. Have they drilled down to integrate these values into theircorporate culture?
CSR is a question of values and implementation