In the name of God

Corporate Sustainability and ResponsibilityCSR 2.0

Lecturer: Amir Hossein RahdariCorporate Sustainability and Responsibility International Corporate Governance and Responsibility Development Center amir@cgiran.orgAh.rahdari@modares.ac.ir

Outline

The main themes :

The ontological reasoning behind CSR-Macro view (why CSR has failed?)

CSR 2.0

CSR theories and models

Has CSR failed as a Response???

if every company on the planet were to adopt the best environmentalpractice of the “leading” companies, the world would still be movingtoward sure degradation and collapse.

Paul Hawken

I believe that the vast majority of companies fail to be “good” corporatecitizens. Most sustainability and corporate responsibility programs areabout being less bad rather than good. They are about selective andcompartmentalized “programs” rather than holistic and systemicchange.

Jeffrey Hollender

Has CSR failed as a Response???

CSR is focused at the micro level – supporting social or environmentalissues that happen to align with a company’s strategy, but withoutnecessarily changing that strategy – Systemic CSR focuses onunderstanding the interconnections in the macro level system (society,communities, economies and ecosystems) and changing a company’sstrategy to optimize the outcomes for this larger human and ecologicalsystem.

Goals of Sustainable Development

▪ Economic Development

▪ Social Inclusion

▪ Environmental Integrity

CSR Has Failed: Almost all measures are going banana

Johan Rockström - 09

Planetary Boundaries:

Climate Change

Ocean Acidification

Stratospheric Ozone Depletion

Nitrogen Cycle-Phosphorous Cycle

Freshwater Use

Land Use

Biodiversity Loss

Atmospheric Aerosol Loading

Chemical Pollution

Living Planet Index

Global Ecological Footprint (1961-2003): A measure of theproductive capacity of the biosphereused to provide naturalresources and absorb wastes.

Population

4 Population Scenarios for 2100

Current Fertility Scenario – 28.6 B

High Fertility Scenario (2+1.5 children) – 16.6 B

Medium Fertility Scenario (2 children) - 10.8 B

Low Fertility Scenario (1 child) – 6.8 B

Disease-Poverty Trap

Poverty

Disease

MDG 1

Income Inequality

Source: Piketty and Saez, based on IRS data

Has CSR failed as a Response???

CSR is focused at the micro level – supporting social or environmentalissues that happen to align with a company’s strategy, but withoutnecessarily changing that strategy – Systemic CSR focuses onunderstanding the interconnections in the macro level system (society,communities, economies and ecosystems) and changing a company’sstrategy to optimize the outcomes for this larger human and ecologicalsystem.

Quotes

‘Companies still thinking about the environment as a social responsibility rather than a business imperative are living in the dark ages.’

Carter Roberts

For nearly 11 years, now, we have been on this mission; we call it, “climbing Mt. Sustainability”, a mountain higher than Everest, to meet at that point at the top that symbolizes zero footprint—zero environmental impact. Sustainable: taking nothing, doing no harm.

Ray Anderson

Label War

Corporate Social Responsibility

Business Ethics

Corporate Governance

Corporate Philanthropy

Corporate Sustainability

Stakeholder Engagement

Corporate Citizenship

Social Entrepreneurship

Environmental Management

Business and Human Rights

Corporate Accountability

Occupational Health and Safety

Business Ethics

Ethical Decision Making

Ethical consumerism

Consumers have a responsibility to make ethicalchoices to change the negative trends.

Fair-trade Coffee

Timothy Devinney “The Myth of Ethical Consumer”A coffee shop, Sydney, AustraliaAdding fair-traded coffeeOnly 1%Reminder 30%Peers 70%

Ethical Consumer

CSR: Every day, every where

Our Ability to Respond

It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.

Josiah Charles Stamp

Responsibility: Response - ability

CSR 1.0: Ages and Stages of CSR

Defensive CSR: Risk and Compliance (Age of Greed)

Charitable CSR (Age of Philanthropy)

Promotional CSR (Age of Marketing): PR

Strategic CSR (Age of Management): codes and standards, compliance - Strategic

Transformative CSR (Age of Responsibility)

CSR 1.0 and 2.0: Ages and Stages of CSR

Defensive

Charitable

Promotional

Strategic

Transformational

The Age of Greed

Earth provides enough to satisfy every man’s need, but not every man’s greed.

Mahatma Gandhi

The Age of Greed

Greed Old English- grædig -hunger and

eagerness Avarice – old French (avere) – to crave

or long for Greek – philagyros- money-loving Deursch- habsüchtig – to have a

sickness or disease

Defensive CSR

0

10

20

30

40

50

60

70

80

90

Jan Apr Jun Aug Oct Nov DEC

E n r on 2 0 0 1

S t o ck p r i ce

Dollar

The Age of Philanthropy

I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution.

Andrew Carnegie

I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man, according to the dictates of my conscience.

John D. Rockefeller Sr.

Charitable CSR

Carneigie ’s Principles of Wealth

Principle of Charity:

Wealthy should give to the needy.

The Stewardship Principle:

Hold money in trust.

Caveat: Only Business people that.

Charitable CSR

Standard Oil

Price fixing

Cleveland Massacre

4 month

23/26 competitors

How companies make money not just how they give it away?

The Age of Marketing

You can’t get there from here by any mechanism that depends on support from institutions that benefit from the status quo.

Paul Hawken

Promotional CSR

▪ Brand and reputation

▪ Green washing

▪ Sustainability reporting

The Age of Management

Increasingly, we think in terms of a “triple bottom line”, focusing on economic prosperity, environmental quality, and – the element which business has tended to overlook – social justice.

John Elkington

Strategic CSR

▪ Integration of CSR into

▪ Coca Cola – Water management (Core)

▪ Codes and Standards

▪ Blue washing

CSR Has Failed: Incremental CSR

▪ ISO 90001; ISO 14001; ISO 26000

▪ Kaizen philosophy

CSR Has Failed: Peripheral CSR

▪ MNCs are the most .

▪ SMEs are not active in CSR.

▪ Harm Reduction

▪ A Focus on Harm Reduction,published on 6 November 2013,covers how we're working to addressthe public health impact of ourproducts.

▪ Source: www.bat.com

CSR Has Failed: Uneconomic CSR

▪ Vice fund (outperform)

▪ Fair trade

▪ Vermont Organic Produce

▪ Eco-efficiency (cost reduction)

Counter-case: CSR is Economic

The Global 100

The Global 100 out-performed its benchmark, the MSCI AllCountry World Index (ACWI), by 7.29% from inception(February 1st, 2005) to March 31st, 2014.

Web 1.0 vs. CSR1.0

▪ 1996 – 45 m users

▪ 250,000 sites

▪ Brochures

▪ One-way communication

▪ Netscape (innovative) vs. Microsoft (standardization)

▪ Philanathro-capitalism

▪ How the rich can save the world.

▪ Body shop

▪ Ben & Jerry’s

Web 2.0 vs. CSR 2.0

▪ Web 2.0

▪ Collective intelligence

▪ Collaborative networks

▪ User participation

▪ Social media

▪ Knowledge syndication

▪ Beta testing

▪ New philosophy

▪ CSR 2.0

▪ Global commons

▪ Innovative partnership

▪ Stakeholder involvement

▪ Stakeholder panels

▪ Real-time reporting

▪ Social enterprise

▪ New business model

cf. Web 2.0 and CSR 2.0

▪ 2006 – 1 Billion users

▪ 80,000,000 sites

▪ Cloud

▪ Interactive: Two-way communication

▪ Collective intelligence

▪ User-generated content (wiki)

▪ Open-source

▪ Ray Anderson - Interface

▪ Co-create

The Age of Responsibility

The first industrial revolution is flawed. It is not working. It isunsustainable. It is a mistake and we must move on to another andbetter industrial revolution and get it right this time.

Ray Anderson

Transformative Radical CSR

Organic Cotton

Footprint Chronicles

How to measure CSR?

CSR 2.0: Principles

▪ Creativity

▪ (social enterprises)

▪ Scalability

▪ Responsiveness

▪ Glocality

▪ Cradle-to-cradle

The Principle of Creativity

Creativity represents a miraculous coming together of the uninhibited energy of the child with its apparent opposite and enemy, the sense of order imposed on the disciplined adult intelligence.

Norman Podhoretz

Creativity

Anurag GuptaBYD

Creativity

Necessity is the mother of invention and desire is the father of effort.

The Principle of Scalability

Green technology – going green – is bigger that the Internet. It could be the biggest economic opportunity of the 21st century.

John Doerr

100% renewable energyZero wasteSustainable products

Scalability

Choice editing: Fish products Sustainable Fair trade

The Principle of Responsiveness

As our planet’s life-support system begins to fail and our very survival as a species is brought into question, remember that our children and grand children will ask not what our generation said, but what it did.

HRH The Prince of Wales

Responsiveness

2.6 B not have proper sanitation

Every $1 spent on water andsanitation generates returnsof $8 in saved time, increasedproductivity and reducedhealth costs.

2,000 children die every yearfrom diarrhea caused byunsafe water and poorsanitation.

The Principle of Glocality

We must ensure that the global market is embedded in a broadly shared values and practices that reflect global social needs, and that all the world’s people share the benefits of globalization.

Kofi Annan

Glocality

Co-operativeInvest in farmers to provide produce rather importing

Mining

Think Global…Act Local…

The Principle of Circularity

In economics, they talk about “end of life” as if something has just lost its value and it’s just fallen off a cliff somewhere. We don’t talk about end of life, so that’s a fundamental difference.

William McDonough

Right now, the world runs on consuming and discarding. We’re saying that we’re taking responsibility for our products from birth ‘til birth.

Yvon Chouinard

Circularity: Cradle-to-cradle

Fone bak

Mobile 9 month in UK

Source: http://www.c2ccertified.org/products/scorecard/citop_zero

Fuji Xerox 98.5% zero waste (Thailand, Japan and Malaysia) - Circular Economy

Interface Floor (Mission Zero)

Puma environmental profit and loss account

Local CSR drivers

Driver Root

Cultural Tradition CSR often draws strongly on deep-rooted indigenous cultural traditions of philanthropy, business ethics and community embeddedness.

Political Reform CSR cannot be divorced from the socio-political policy reform process, which often drives business behavior towards integrating social and ethical issues.

Socio-economic priorities CSR is often directly shaped by the socio-economic environment in which firms operate and the development priorities this create.

Governance Gaps CSR is a way to plug “governance gaps” left by weak, corrupt or under-resourced government that fail to adequately provide various social services.

Crisis response CSR responses can be catalyzed by economic, social, environmental, health-related or industrial crises.

Global CSR drivers

Driver Root

Market access CSR may be seen as an enabler for the companies in one country or region trying to access markets in other parts of the world.

International standardization

CSR codes, guidelines and standards are a key driver for companies wishing to operate saglobal players.

Investment incentives CSR is given an incentive by the trend of SRI.

Stakeholder activism CSR is encouraged through the activism of stakeholders/pressure groups acting to address the perceived failure of the market and government policy.

Supply chain integrity CSR among SMEs boosted by requirements from MNCs.

Definition: Corporate Sustainability and Responsibility

CSR is the way in which business consistently create shared value insociety through economic development, good governance, stakeholderresponsiveness and environmental improvement.

CSR is an integrated approach by business that builds, rather thanerodes or destroys, economic, social, human and natural capital.

Creative destruction and creative reconstruction

CSR 2.0 DNA Model: Inclusive Definition

CSR 2.0 DNA Model: Inclusive Definition

DNA CodeGoal Key indicator

Value Creation Economic Development Capital investmentBeneficial productsInclusive Business

Good Governance Institutional effectiveness LeadershipTransparencyEthical Conduct

Societal Contribution Stakeholder orientation PhilanthropyFair labour practicesSupply change integrity

Environmental Integrity Sustainable ecosystem Ecosystem protectionRenewable resourcesZero-waste production

Responsibility: Take away

Responsibility is the gateway to achievement. And achievement is thepath to growth. Being responsible for something means that we areentrusted with realizing its potential, turning its promise into reality.We are the magicians of manifestation, ready to prove to ourselves andto others what can happen when we put our minds to it, if we focus ourenergies and concentrate our efforts.

Do few things but do them well is the maxim of responsibility.

Being responsible also does not mean doing it all ourselves.Responsibility is a form of sharing, a way of recognizing that we’re all inthis together. ‘Sole responsibility’ is an oxymoron.

Gazillion ThanksLecturer: Amir Hossein RahdariCorporate Sustainability and Responsibility International Corporate Governance and Responsibility Development Center amir@cgiran.orgAh.rahdari@modares.ac.ir

CSR: Beyond Financials 2014

CSR: Beyond Financials 2014

▪ 2500 business leaders, 34 countries

CSR: Beyond Financials 2014

CSR: Beyond Financials 2014

CSR: Beyond Financials 2014

CSR: Beyond Financials 2014

skyscraper farms Spiraling Skyscraper Farms for a Future ManhattanAugust 2014

CSR in Japan

http://www.tkfd.or.jp/research/project/news.php?id=1253http://www.japanfs.org/en/news/archives/news_id035027.html

Tokyo Foundation- 20132000 companiesDomestic and International