Social Issues Social Criticism of World Trade o

Social Issues

Social Criticism of World Trade o In 1999, the former UN Secretary General Kofi Annan proposed the Global Compact operations in four areas: 1. Human rights protection and avoidance of abuses 2. Labor practices including collective bargaining, elimination of forced labor, abolition of child labor and elimination of discrimination 3. Environmental support for precautionary steps, taking environmental responsibility, and supporting development and diffusion of environmentally friendly technologies 4. Anti-corruption in all forms including extortion and bribery

Other Initiatives Toward World Trade o o o International Labor Organization OECD World Bank The European Union Global Reporting Initiative (GRI)

Corporate Social Responsibility o A form of corporate self-regulation integrated into a business model o The deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit o Benefits of CSR including: n To help recruitment and retention n To offset risk related to environmental accidents n To build upon brand differentiation n To obtain license to operate

Drivers for Corporate Social Responsibility o o o o Ethical consumerism Globalization and market forces Social awareness and education Ethical training Laws and regulation Crises and their consequences Stakeholder priorities

Approaches for Corporate Social Responsibility o Community-based development project o Establish education facilities for local community o Change from short-term relationships with many suppliers to long-term relationships with fewer suppliers o Develop a certain level of environmental and social responsibility together with their suppliers o Spend time on explaining and helping suppliers to improve these requirements

Supplier Code of Conduct o To govern environmental, health, safety, management system, ethics and human rights issues in global supply chain o Different sources of Code of Conduct n United Nations n Industry wide n Individual cooperation

Case Study : Building sustainable supply chain in Brazil Arcelor. Mittal’s supply chain is large and complex, ranging from mining and raw materials to highly sophisticated technological products and activities, and at any one time the purchasing department manages relationships with over 60, 000 suppliers and contractors. Enforcing high and consistent standards of corporate responsibility in these circumstances is a tough challenge, but Arcelor. Mittal has made that commitment, and is working to achieve it.

Arcelor. Mittal’s Challenges o The company’s position in the steel industry brings unique opportunities and unique responsibilities, and its ability to operate successfully is immeasurably enhanced by a reputation for responsible and ethical business practice. o In Brazil it can be challenging to persuade the managers of small- and medium-sized enterprises to introduce sustainability into their management processes.

Arcelor. Mittal’s Approach o working with 15 companies in its supply chain, helping them to incorporate social and environmental standards into their business practices o used a number of their tools and corporate social responsibility indicators o to help implement new processes and measure progress o took part in two regional seminars, where companies from all seven sectors had the chance to share expertise and knowledge

The Outcome o Promoted a closer relationship between Arcelor. Mittal and its suppliers, a relationship built on trust and credibility o All 15 companies in the group developed their own codes of ethics and 11 created new initiatives to save energy, water and paper o Better dialogue between Arcelor. Mittal and suppliers create a robust partnership

Discuss the following questions: n What problems do Alcelor. Mittal address? How does TEAR program help solve these problems? n What issues and challenges do corporate social responsibility present? What can be done to address these issues? n What are the business as well as the technology issues that should be addressed when Arcelor. Mittal built sustainable supply chain in Brazil?