COMM331 Simulation of a Socially Innovative Enterprise

1. Multi-disciplinarity of Commerce as Related to an Enterprise

Lecturer: Goh Hock Seng

PRME –Principles of Responsible Management Education: www.unprme.org The mission of the Principles for

Responsible Management Education (PRME) initiative is to inspire and champion responsible management education, research and thought leadership globally.

The PRME are inspired by internationally accepted values such as the principles of the United Nations Global Compact.

PRME –Principles of Responsible Management Education: www.unprme.org They seek to establish a process of continuous

improvement among institutions of management education in order to develop a new generation of business leaders capable of managing the complex faced by business and society in the 21st century.

In the current academic environment, corporate responsibility and sustainability have entered but not yet become embedded in the mainstream of business-related education.

Sustainability Many large and medium-sized

companies have started to incorporate sustainability into their business strategies.

There is a need to establish clear, user-friendly methodologies and tools to measure the progress that companies are making toward sustainability.

Sustainability Performance of a Company Sustainability is about building a society in

which a proper balance is created between: -economic, -social and -ecological aims. For businesses, this involves sustaining and

expanding economic growth , shareholder value, prestige, corporate reputation, customer relationships, and the quality of products and services.

Sustainability Performance of a Company It also means adopting and pursuing: -ethical business practices, -creating sustainable jobs, -building value for all the company’s stakeholders

and attending to the needs of the underserved. A company that embarks on the path of

sustainability needs to carefully examine its mission, vision and values.

It must be informed about legal constraints and assess all its management structures.

PRME –Principles of Responsible Management Education: www.unprme.org The PRME are therefore a timely global call for

business schools and universities worldwide to gradually adapt their curricula, research, teaching methodologies and institutional strategies to the new business challenges and opportunities.

Taking the Six Principles as a guiding framework, any institutions which is willing to integrate corporate responsibility and sustainability in a gradual but systematic manner is welcome to join the initiative.

PRME –Principles of Responsible Management Education: www.unprme.org As institution of higher education

involved in the development of current and future managers we declare our willingness to progress in the implementation, within our institution, of the following Principles, starting with those that are more relevant to our capacities and mission.

PRME –Principles of Responsible Management Education: www.unprme.org We will report on progress to all our

stakeholders and exchange effective practices related to these principles with other academic institutions:

Principle 1: Purpose Principle 2: Values Principle 3: Method Principle 4: Research Principle 5: Partnership Principle 6: Dialogue

PRME –Principles of Responsible Management Education: www.unprme.org Principle 1: Purpose We will develop the capabilities of students to be

future generators of sustainable value for business and society at large and to work for an inclusive and sustainable global economy.

Principle 2: Values We will incorporate into our academic activities

and curricula the values of global social responsibility as portrayed in international initiatives such as the United Nations Global Compact.

PRME –Principles of Responsible Management Education: www.unprme.org Principle 3: Method We will create educational frameworks, materials,

processes and environments that enable effective learning experiences for responsible leadership.

Principle 4: Research We will engage in conceptual and empirical

research that advances our understanding about the role, dynamics, and impact of corporations in the creation of sustainable social, environmental and economic value.

PRME –Principles of Responsible Management Education: www.unprme.org Principle 5: Partnership We will interact with managers of

business corporations to extend our knowledge of their challenges in meeting social and environmental responsibilities and to explore jointly effective approaches to meeting these challenges.

PRME –Principles of Responsible Management Education: www.unprme.org Principle 6: Dialogue We facilitate and support dialog and debate

among educators, students, business, government, consumers, media, civil society organisations and other interested groups and stakeholders on critical issues related to global social responsibility and sustainability.

=>We understand that our own organisational practices should serve as example of the values and attitudes we convey to our students.

Corporate Social Responsibility and UN Global Compact What Do You Know About

Corporate Social Responsibility?

Corporate Social Responsibility is a concept closely correlated with the United Nations Global Compact, which we examine very closely in this subject.

What Do You Know About Corporate Social Responsibility? While there is no one widely accepted definition,

Corporate Social Responsibility can refer to “…the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large".

This definition derives from Lord Holme and Richard Watts in The World Business Council for Sustainable Development’s publication ‘Making Good Business Sense.’

What Do You Know About Corporate Social Responsibility? Corporate Social Responsibility encourages

corporations to consider the ‘triple bottom line’ in decision making, that is:

-people, -planet, and -profit. Undeniably, corporations have a massive

influence on society, both positive and negative.

What Do You Know About Corporate Social Responsibility? With globalisation has come an increased

awareness that corporations must share responsibility for, and help in overcoming the challenges that face our global society today.

Stakeholders are increasingly expecting companies to adopt socially responsibility practices, and corporations are recognising that adopting such practices makes good business sense.

Corporate Social Responsibility is highly correlated with business success.

Corporate Social Responsibility and UN Global Compact What is The United Nations? The United Nations is an international

organisation that was founded in 1945 in response to the atrocities of World War Two.

At the time, 51 countries committed to international peace and security, developing friendly relations among nations and promoting social progress, better living standards and human rights.

As of 2013, The United Nations is comprised of 193 member states.

Corporate Social Responsibility and UN Global Compact What is The United Nations Global Compact? The United Nations Global Compact was developed by

the United Nations. It is the world’s largest voluntary corporate citizenship

and sustainability initiative, and empowers businesses to align their operations and strategies with ten principles in the areas of human rights, labour, the environment and anticorruption.

Since its official launch on 26 July 2000, the initiative has grown to include more than 8700 corporate participants and other stakeholders from over 130 countries.

Corporate Social Responsibility and UN Global Compact There are 67 participants from Singapore and

Malaysia, 106 from Australia, 65 from Norway, 470 from the United States of America, and 298 from China.

The concept of Corporate Social Responsibility is closely aligned with UN Global Compact.

A company that embraces, supports and enacts a core set of values in the areas of human rights, labour standards, the environment and anti-corruption may be described as acting in a socially responsible manner.

The United Nations Global Compact The UN Global Compact asks companies to

embrace, support and enact, within their sphere of influence, a set of core values in the areas of:

-human rights, -labour standards, -the environment, and -anti- corruption We will examine these areas in more detail, and go

on to look at how embracing these principles will lead to increased business efficiencies and cost savings.

The United Nations Global Compact “The Global Compact asks companies

to embrace universal principles and to partner with the United Nations.

It has grown to become a critical platform for the UN to engage effectively with enlightened global business.”

------UN Secretary General Ban Ki-moon

Overview of the UN Global Compact The UN Global Compact is a strategic

policy initiative for businesses that are committed to aligning their operations and strategies with ten (10) universally accepted principles in the areas of:

-Human rights, -Labour, -Environment, and -Anti-corruption.

Overview of the UN Global Compact By doing so, business, as a primary driver of

globalisation, can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere.

As social, political and economic challenges (and opportunities) –whether occurring at home or in other regions –affect business more than ever before, many companies recognise the need to collaborate and partner with governments, civil society, labour and the United Nations.

Overview of the UN Global Compact This ever-increasing understanding

is reflected in the Global Compact’s rapid growth.

With over 10,000 corporate participants and other stakeholders from over 130 countries, it is the largest voluntary corporate responsibility initiative in the world.

Overview of the UN Global Compact Endorsed by chief executives, the Global

Compact is a practical framework for: -the development, implementation, and

disclosure of sustainability policies and practices,

-offering participants a wide spectrum of workstreams, management tools and resources –all designed to help advance sustainable business models and markets.

Overview of the UN Global Compact Business Model A business model is a firm’s plan or

diagram for: -how it competes, -uses its resources, -structures its relationships, -interfaces with customers, and -creates value to sustain itself on the

basis of the profits it earns.

Overview of the UN Global Compact The UN Global Compact works toward the

vision of a sustainable and inclusive global economy which delivers lasting benefits to people, communities, and markets.

To help realise this vision, the initiative seeks to: 1. Mainstream the Global Compact’s Ten

Principles in business strategy and operations around the world, and

2. Catalyze business action in support of UN goals and issues, with emphasis on collaboration and collective action.

Overview of the UN Global Compact With these objectives in mind, the Global

Compact has shaped an initiative that provides collaborative solutions to the most fundamental challenges facing both business and society.

The benefits of engagement include the following:

1. Adopting an established and globally recognised policy framework for the development, implementation, and disclosure of environmental, social, and governance policies and practices.

Overview of the UN Global Compact 2. Sharing best and emerging practices to

advance practical solutions and strategies to common challenges.

3. Advancing sustainability solutions in partnership with a range of stakeholders, including UN agencies, governments, civil society, labour, and other non-business interests.

4. Linking business units and subsidiaries across the value chain with the Global Compact’s Local Networks around the world (many of these in developing and emerging markets).

Overview of the UN Global Compact 5. Accessing the United Nations’ extensive

knowledge of and experience with sustainability and development issues.

6. Utilising UN Global Compact management tools and resources, and the opportunity to engage in specialised workstreams in the environmental, social and governance realms.

Finally, the Global Compact incorporates a transparency and accountability policy known as the Communication on Progress (COP).

Overview of the UN Global Compact The annual posting of a COP is an

important demonstration of a participant’s commitment to the UN Global Compact and its principles.

Participating companies are required to follow this policy, as a commitment to transparency and disclosure is critical to the success of the initiative.

Overview of the UN Global Compact Failure to communicate will result in a

change in participant status and possible expulsion.

In summary, the Global Compact exists to assist the private sector in the management of increasingly complex risks and opportunities in the environmental, social and governance realms, seeking to embed markets and societies with universal principles and values for the benefit of all.

United Nations Global Compact: The Ten (10) Principles The UN Global Compact’s ten principles in the areas

of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from:

-The Universal Declaration of Human Rights -The International Labour Organisation’s Declaration

on Fundamental Principles and Rights at Work -The Rio Declaration on Environment and

Development -The United Nations Convention Against Corruption.

United Nations Global Compact: The Ten (10) Principles The UN Global Compact asks companies to

embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption.

Human Rights Principles Principle 1: Businesses should support and

respect the protection of internationally proclaimed human rights, and

Principle 2: Make sure that they are not complicit in human rights abuses.

United Nations Global Compact: The Ten (10) Principles Human Rights Principles Principle 1 and 2 are concerned with human

rights and find their basis in the 1948 Universal Declaration of Human Rights which sets basic minimal international standards for the protection of the right to equality, life and security, personal freedom, and economic, social and cultural freedoms of individuals.

The Universal Declaration of Human Rights is based on the premise that human rights are universal, inalienable, interdependent and indivisible.

United Nations Global Compact: The Ten (10) Principles Human Rights Principles Principle 1 states that businesses should

support and respect the protection of internationally proclaimed human rights.

This principle recognises that business has a key role to play in upholding individual human rights, and should support and respect these human rights by promoting the rule of law in countries where they operate, by being aware of potential human rights issues along the value chain, and by building good community relationships.

United Nations Global Compact: The Ten (10) Principles Human Rights Principles Principle 2 proclaims that businesses

should make sure that they are not complicit in human rights abuses.

This principle aims to ensure that businesses are not implicated in human rights abuses that another company, government, individual or group is causing.

Human rights and labour standards are closely related.

United Nations Global Compact: The Ten (10) Principles Human Rights Principles When conducting business in your home

country, you know the workforce and how they operate, and are aware of the relevant workplace standards.

As soon as you have a supplier offshore, or in a country whose human rights record you are unsure of, you are losing control, and may be put in a position where your company is not respecting human rights.

United Nations Global Compact: The Ten (10) Principles Labour Principles There are four principles relating to labour

standards. Principle 3: Businesses should uphold the freedom of

association and the effective recognition of the right to collective bargaining.

Principle 4: The elimination of all forms of forced and compulsory labour.

Principle 5: The effective abolition of child labour, and Principle 6: The elimination of discrimination in

respect of employment and occupation.

United Nations Global Compact: The Ten (10) Principles Labour Principles These principles are seen by the UN as being

fundamental to the rights of people at work. The International Labour Organisation, which

is a UN body specifically concerned with the labour principles, provides companies with strategies, information and practical steps to assist in compliance with the principles.

United Nations Global Compact: The Ten (10) Principles Labour Principles Principle 3 states that businesses should uphold

freedom of association and the effective recognition of the right to collective bargaining.

This principle implies a respect for the rights of employees and employers to freely and voluntarily establish and join organisations of their own choice, such as trade unions.

The right to collective bargaining aims to regulate the dialogue between employers, workers and the organisation with respect to terms and conditions of work.

United Nations Global Compact: The Ten (10) Principles Labour Principles Principle 4 proclaims that businesses

should uphold the elimination of all forms of forced and compulsory labour.

In this context, forced labour refers to any work or service situation where the worker has not consented to the work and the menace of a penalty is present.

United Nations Global Compact: The Ten (10) Principles Labour Principles Principle 5 states that businesses should

uphold the effective abolition of child labour. This principle regulates the minimum age for

admission to employment or work and identifies categories of work that are classified as the worst forms of child labour including slavery, the use of children in prostitution or pornography, and work which is likely to harm the health, safety or morals of the child.

United Nations Global Compact: The Ten (10) Principles Labour Principles Principle 6 states that businesses should

eliminate discrimination in respect of employment and occupation.

This principle aims to eliminate situations where workers are treated differently or less favourably because of characteristics that are not related to their merit or requirements of the job, for example gender, age, race, disability, or sexual orientation.

United Nations Global Compact: The Ten (10) Principles Labour Principles A global economy enables companies to

move manufacturing offshore to lower expenses.

The labour principles of the UN Global Compact attempt to ensure that the labour standards in the workplace are not compromised for the purpose of generating profit.

United Nations Global Compact: The Ten (10) Principles Environment Principles Principles 7, 8 and 9 are concerned with the

Environment, and are derived from the Rio Declaration on Environment and Development.

Principle 7: Businesses should support a precautionary approach to environmental challenges.

Principle 8: Undertake initiatives to promote greater environmental responsibility; and

Principle 9: Encourage the development and diffusion of environment friendly technologies.

United Nations Global Compact: The Ten (10) Principles Environment Principles Principle 7 states that businesses should support a

precautionary approach to environmental challenges. The precautionary approach encourages business to

take action before the environmental harm occurs. This principle recognises that while it may be costly to

implement environmentally sustainable business practices, the cost of not doing so will be far greater in the long term.

Adopting a precautionary approach can have significant long term benefits, both financially and environmentally.

United Nations Global Compact: The Ten (10) Principles Environment Principles Principle 8 reads that businesses should

undertake initiatives to promote greater environmental responsibility.

This principle recognises that industry has contributed to the environmental challenges facing our global community today, and reflects the societal expectation that businesses should take greater environmental responsibility and engage in more environmentally sustainable practices.

United Nations Global Compact: The Ten (10) Principles Environment Principles Principle 9 proclaims that businesses

should encourage the development and diffusion of environmentally friendly technologies.

Environmentally friendly technology refers to technology which aims to protect the environment, is less polluting, uses resources in a sustainable manner, and recycles wastes and products.

United Nations Global Compact: The Ten (10) Principles Environment Principles Principle 9 Adopting environmentally friendly technologies can

increase the overall competitiveness of the company, reduce the use of raw materials, and create new business opportunities.

Engaging in poor environmental practices can not only cause irreversible environmental damage, but can be extremely costly for the business.

You can play the video by following the link or accessing: http://www.youtube.com/watch?v=mzc9iudD3fE

United Nations Global Compact: The Ten (10) Principles Anti-Corruption Principles Principle 10: Businesses should work against

corruption in all its forms, including extortion and bribery.

The Anti-Corruption principle within the UN Global Compact is derived from the United Nations Convention against Corruption, and was added to the UN Global Compact in 2004.

This principle states that businesses should work against corruption in all its forms, including extortion and bribery.

United Nations Global Compact: The Ten (10) Principles Anti-Corruption Principles Principle 10: It must be acknowledged that corruption can

take many forms that vary in degree from the minor use of influence to institutionalised bribery.

Transparency International's definition of corruption is "the abuse of entrusted power for private gain” which is inclusive of not only financial gain but also non-financial advantages.

United Nations Global Compact: The Ten (10) Principles Anti-Corruption Principles Principle 10: Extortion is defined in the OECD Guidelines for

Multinational Enterprises as: “the solicitation of bribes is the act of asking

or enticing another to commit bribery. It becomes extortion when this demand is

accompanied by threats that endanger the personal integrity or the life of the private actors involved.”

United Nations Global Compact: The Ten (10) Principles Anti-Corruption Principles Principle 10: Bribery is defined by Transparency International’s

Business Principles for Countering Bribery as referring to: “An offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is dishonest, illegal or a breach of trust, in the conduct of the enterprise's business.“

Corruption is pervasive in many countries around the world, and is something that must be considered when conducting business on a global scale.

What are the advantages of joining The UN Global Compact? A company that aligns their operations and

strategies with the UN Global Principles is not only benefiting wider society, but is likely to reap various business benefits including:

• Local and global opportunities to dialogue and collaborate with other businesses, NGOs, labour organizations and governments on critical issues

• A platform to share and exchange best and emerging practices to advance practical solutions and strategies to common challenges.

What are the advantages of joining The UN Global Compact? • Access to the UN's extensive knowledge of

and experience with sustainability and development issues.

• Increased accountability and transparency through a public communication on progress.

• Improved reputation and increasing brand value towards consumers and investors – specifically in the context of changing societal expectations

What are the advantages of joining The UN Global Compact?

• Increased employee morale and productivity, and attracting and retaining the highest qualified employees.

• Improved operational efficiency, for instance through better use of raw materials and waste management.

Note to students It may be useful to provide an example of a

company based in your country which has signed the UN Global Compact, and some of the steps they have taken to ensure compliance with the ten principles.

The following website contains a search engine where you can search companies by country and access their annual communication on progress.

http://www.unglobalcompact.org/participants/search

Your Role In conclusion, it is useful to take a minute to

reflect on the words of Kofi Annan in his delivery to the World Economic Forum in Switzerland, on 31 January, 1999.

Annan stated that “we have to choose between a global market driven only by calculations of short-term profit, and one which has a human face.

Between a world which condemns a quarter of the human race to starvation and squalor, and one which offers everyone at least a chance of prosperity, in a healthy environment.

Test Your Understanding

What is Corporate Social Responsibility (CSR)?

Test Your Understanding What is Corporate Social

Responsibility (CSR)? CSR is an initiative by corporations

to take responsibility for their impact on the environment and welfare of society beyond that required by environmental protection group or regulators.