Corporate Social Responsibility and RelocationRelocation – Challenges and Opportunities 28-29 June 2006European Economic and Social CommitteeProfessor Nigel Roome: Daniel Janssen Chair of Corporate Social Responsibility, Solvay Business School, ULB
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Structure
• Background and Definitions
• CSR issues raised by relocation
• Management challenge arising from diversity in CSR encountered in relocation
• Conclusions
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Corporate Social Responsibility – A definition
The principal purpose of enterprise is the creation of value for shareholders. CSR is seen as the voluntary management of relationships with ‘stakeholders’ (social, environmental and economic) as a way to provide for the continued ‘existence’ of an enterprise so that it can pursue its chosen purpose
However, CSR activities do affect the way an enterprise fulfils its purpose as it offers:
a basis for protecting the value of the existing assets of the enterprise
a stimulus for creating value through innovation in the activities of the enterprise - technologies, products and services, management know-how and business models
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ContentionIn managerial/enterprise terms CSR as ‘relationship’ management
involves: a recognition of the relationships between an enterprise and others in society an awareness of context and trends, and a sensitivity to issues CSR is therefore measured through the ability of an enterprise to: • anticipate and contextualise its activities, • develop effective and coherent systems to control risks and to spur innovation
and change• engage with stakeholdersThrough this an enterprise is responsive to these complex
relationships and to the stakeholders that represent them
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Key stakeholders
Shareholders, socially responsible investing, agencies, employees, suppliers, agents, & competitors
Customers
Environmental interests and concerns
Neighbours, societies, governments & their departments, NGOs
Media, Codes and CSR Institutions
Economic
Non-Economic
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European Commission Communication March 2006* • Establishing CSR as part of the European competitive landscape• CSR seen as the business contribution to a more competitive, sustainable and
cohesive social market economy • CSR as the voluntary contribution of business enterprises to issues such as:
– Integrated labour markets and social inclusion– Skills development– Improvements in public health– Innovation performance– More rational use of natural resources– Better image of enterprise – Respect for human rights, environmental protection and labour standards– Reduction of poverty in developing countries in line with Millennium Goals– (regional policy - EC cohesion)* Implementing the Partnership for Growth and Jobs: Making Europe a pole of excellence on CSR (COM(2006)136
final of 22.03.2006)
Policy background
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Types of CSR issue from relocation
Shareholders (competitiveness) Employees (job security, development,
retraining & out-placement & retraining, inclusion)
Customers (product provenance and tracking)
Environmental interests and concerns (protection of global and local key resources and sinks)
Neighbours (local value added and retained, minimum nuisance and protection of environmental assets, maintenance and improvement of social cohesion)
Governments (inward investment, economic multipliers, cultural and environmental asset protection, development of local know-how)
NGOs (labour and human rights, environment)
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But relocation has many CSR poles…
Location(To B)
Relocation(From A to B)
Within EUBeyond EU Developing Economies
Entry Policy*
Exit & Entry Policy*
Entry Policy for Developing Economies*
Exit Policy From EU plus
Entry Policy for Developing Economies*
BEU
Bex-EU
BEU
AB
ex-EUA
(* This does not take account of market expectations of CSR)
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Poles of issues Entry Policy EU
Understand local CSR context in host and home country expectations of CSR activities in host
Entry and Exit Policy EU Understand local CSR context in host, home
country CSR expectations in host as well as home country CSR expectations on ‘closure’
Entry Policy for Developing Economies Understand local CSR context, home country
CSR expectations on operations in developing economies
Exit from EU and Entry Policy for Developing Economies Understand local CSR context, home country
CSR expectations on operation in developing economies as well as home country CSR expectations on ‘closure’
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Relocation confronts diversity in CSR globally, regionally and nationally
‘Regional blocks’ and countries have different views on the role of business in society
Countries have different CSR policies and institutional support for CSR practices
Countries have diverse CSR agendas
Enterprises have different managerial understandings of CSR and CSR has many different positions in their strategies
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North AmericaShareholder Capitalism
China & IndiaNew Capitalism
EuropeSocial Market Capitalism
JapanNetwork Capitalism
Emerging models of the role of enterprise in society
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North America Philanthropy & community involvement
Human rights & labour standards
Diversity at work
Transparency & anti-corruption
Selling products to the poorest - Bottom of the Pyramid (BOP)
Jobs and outsourcing
Africa & South America Adding & retaining value in country Health & welfare Child work with education Social & institutional development Appropriate technologies
Europe• Environmental sustainability• Labour conditions• No-child or forced labour• Supply-chain responsibility• Overseas development• Social cohesion
Asia Growth with minimum environment damage Employment Value added & retained Access to energy & water
Developed & developing world perspectives on enterprise & CSR
* Some of the distinctions between developed & developing countries maybe found within the enlarged EU
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UK–Full-spectrum CR–Shareholders, customers, neighbours, social & environmental responsibility & governance 360° stakeholder view
Netherlands–Environmental sustainability
–Overseas trade–Human rights–Immigrant inclusion
France –Labour contracts & rights
–Community relations
–Environmental sustainability
–Product safety –Social inclusion
Germany–Relations with neighbours
–Training & education
–Environmental sustainability
–Product/chain security
Sweden–Overseas operations
–Human rights–Selling to responsible business customers
Poland–Enterprise in society
–Corruption–Loss of employee provision as it is seen as part of central planning
Within Europe – Mosaic of CSR Policies & Agendas
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Conclusions
Managing the CSR aspects of (re)location is an incredibly difficult process because of the many contexts, and local as well as global issues to address
Relationship management is difficult to measure
Engaging with stakeholders is not a core competence of most enterprises, especially not at pre-project assessment stage (even for companies like mining, oil & gas which are familiar with following location)
Yet, CSR issues will not go away and the possibility of managers to misunderstand context and CSR issues is more probable in new contexts that arise from relocation
