When Compassion meets Profit CSR strategies programs Trends

When Compassion meets Profit: CSR strategies & programs Trends and coordinates of the CSR programs in connection to sustainability, corporate ethics and compliance strategies Recast synergies, reshaped agendas CSR – between “mine field” and gold mine In-between bottom line maximisation, wishful thinking and actual positive intervention What CSR directions or causes constitute a priority, depending on industry? 1

Main directions for CSR portfolio Educational, social, environmental and other CSR programs (e. g. cultural or sports) that are organised in-house Vs. those developed in partnership with global or local NGO partners How are CSR priorities connected (structurally and functionally) to lines of business and operational requirements? 2

Target groups Target-groups intended for the CSR and sustainability reports (readership) Stakeholder analysis for CSR programs (not restricted to beneficiaries) Who do CSR decision-makers think reads their communicated input? Monitoring, measuring and assessment toolkits – differentiated according to stage of process 3

CSR assessment milestones Monitoring, measuring and assessment toolkits, in the aftermath of program implementation Selection, visibility, evaluation, benefit-cost ratio. Critics say… Programs as alleged corporate hypocrisy that endorses the “tyranny of virtue”. Golden standard that all corporate players need to adhere to, even reluctantly, ignorantly or in contradiction to their authentic beliefs Why should non-smokers’ rights go above smokers’ rights? 4

CSR & Globalisation Policy-making and public agenda-setting CSR aims to „court or lure” consumers (Klintman, 2013) who are increasingly more knowledgeable and selective “Courtship” - set against the backdrop of persistent economic and financial crisis, leading to austerity and decreased consumeristic impulses Consumers’ rational vs. emotional choice – latter, more likely to elicit affinity & enhance brand awareness, visibility, credibility and popularity Internal dimension of employee volunteering (an innovative, low-budget version of teambuilding 5

Romanian CSR & sustainability landscape Employee volunteering - an innovative, multi-purpose, low-budget version of teambuilding To bridge this existing gap between CSR theory and practice: concepts & empirical findings 6

Green Workplaces Lucrative activities that contribute to environmental quality conservation or restoring. In fields such as agriculture, manufacturing, research-innovation-development, administration and services Positive impact: protecting ecosystems & biodiversity, optimised resource consumption (water supply, energy, materials), minimising carbon imprint, waste management) 7

How will sustainability-based economy affect employment? Additional jobs across industries – e. g. pollution control devices as production equipment Dispensable / Replaced jobs: transition from fossil fuels to renewable energy, or from traditional garbage disposal systems to new recycling, incineration, conversion to bio-fuel and waste management innovation Cancelled jobs (without direct replacement) – e. g. banned packaging materials, production stops Existing jobs, transformed and redefined – “greened” as profiles, job description & job specification, work protocols 8

Impact on supply chain Upstream workplace “greening” process Providers for solar or wind energy rely on traditional industries – now reconfigured (e. g. use of steel for wind turbine) Green Jobs cover an extensive area of qualifications, educational fields and occupational profiles Shades of green employment: some types are more profound & more transformative than others 9

Eco-friendly threshold Where do we establish the threshold between energy efficient and inefficient methods? Incremental outlook – gradual optimisation Ever more demanding standards, thresholds & regulatory pressure Accused of blocking economic growth Lower threshold increases green employment headcount, however progress remains illusory Technological progress & urgent need to perform changes 10

Due diligence Anticipatory government policies – due diligence, longer time horizon Responsibility for ensuring macro-scale infrastructure projects and safeguarding a standardised, equitable environment for all actors – government authorities. Main regulatory provisions: Subventions: moving them away from environmentally damaging industries and towards renewable energy suppliers, efficient technologies, clean production and public transport 11

Due diligence (2) Carbon markets – remedies against commerce with carbon emissions, Applying innovation regarding Kyoto protocols e. g. Clean Development Mechanism as safe funding mechanism for green projects and employment Fiscal reform: increased eco-taxes and extensive replication Revenues than can downshift financial burden of employment contributions, while lowering carbonand methanol-intensive economic activities 12

Due Diligence (3) Tasks and mandates: making sure that regulatory tools are used with maximum addressability and applicability to stimulate technological development, and the provision of greener products and services. E. g. land use policies (incl. greenfield), construction, energy efficiency standards for equipment and transport etc. Extensive responsibility of producers Buy-back schemes Return / refund policies for all types of deliverables – safeguarding consumers’ rights 13

Talent Pool – skill deficit for green workers Eco labelling for consumers to ensure they can make responsible purchasing decisions Aiming to encourage producers to conceive & distribute eco-friendly products Impact on budgets assigned to research, development & innovation: Reduced support for nuclear and fossil fuel Increased financing for renewable energy & processing technologies 14

Transparency in CSR policies components Green Careers Survey – 92% of young employees prefer to work for an ecofriendly company, 80% want a green job (carrying a positive environmental influence): Sites: greenbiz. com, greenjobs. com, treehugger. com Crisis in employment, also in environment Current economies rest on unsustainable foundation (e. g. agriculture, mining, production, services, transport) 15

Preventive care & Damage control Economic restructuring, natural environment restoration Some changes are already irreversible Recast lifestyle and consumption options (critical revaluation) Job precariousness, vulnerability: 0. 5 billion employees do not meet the 1$/day threshold associated to extreme poverty, nearly 1. 3 billion do not meet the 2 USD/day threshold 16

Costs of “going green” Pressure on job market – esp. in developing countries. Risks to employment: outsourcing, automatized processes, income instability Green jobs prevent or solve issues related to waste, noise, destroyed bio-diversity & landscapes Too poor to be green? Incurred costs of green jobs 17

Accountable departments / responsible positions Compliance Internal Audit and Business Risk Management Security Legal HR Integrity Officer Compliance Committee of the Supervisory Board Ombudspersons Mediation and arbitration advisors Certification by professional associations 18

Acknowledgement & expertise Expertise & counselling on ethics, integrity and transparency: Ethics & Compliance Initiative, International Business Ethics Institute Compliance to statutory provisions: UN Global Compact Accreditation as World’s Most Ethical Companies Index listing 19

Accessibility (communication means) Postal address, email, toll-free telephone, fax, anonymous reporting form Secured storage (hosted on distinct server) or archived in locked closets Encrypted format – “Speak Up” mechanism Multilingual web application 20

Accessibility (2) Secure, limited-access database compliant with local data protection laws Dedicated integrity website Annual questionnaires addressed to professionals in sensitive roles (legal, HR, quality assurances, sales, procurement, audit, finance & accounting) Anonymous tip-off by Business Keeper Monitoring Systems (BKMS) – outsourced service 21

Addressability (target audience) Advice-line, help-line, hotline or alert-line for internal and external stakeholders: Shareholders: Actual and ex-employees Job candidates Associated staff (leased/ subcontracted, interns, temps) Retail and wholesale customers 22

Shareholders (II) Suppliers Distributors Competitors Subcontractors Joint venture partners Advisors, business consultants Community members Media 23

Other addressability issues Simple, risk-free, straightforward communication “Tell us” reporting channel Choice to remain anonymous unless prohibited by national regulations BPO (Business Practices Office) – recipient of compliance breaches reports 24

Coverage – topics of reported misconduct Criminal acts (theft, fraud, corruption) Offering, demanding or receiving bribe, illegitimate gifts, gratuities as facilitation payment Nepotism, conflict of interests Acts that endanger occupational health and safety Abusive labour terms & conditions (compensation & benefits, work hours, training and development opportunities, access to promotion and transfer / relocation etc. ), discrimination, violation of equal opportunities principle 25

Coverage (2) Workplace bullying or harassment Damage against environment Human rights violations: freedom to associate, right to free expression of opinions (unless offensive) Child labour, forced labour, human trafficking Import & export infringement Accounting malpractice: financial inaccuracy Falsifying documents Unauthorised public speaking or writing articles on behalf of the company without prior agreement of Corporate Communications dept. 26

Coverage (3) Miscarriage of rules, concealing injustice Information leakage (unauthorised disclosure of classified information) Illegitimate use of corporate resources (including contracted time or corporate email) and equipment Proselyte manifestations of political or religious orientation Endorsement of third-party products or services in the corporate name, without having a representation mandate Substance abuse (smoking, narcotics or alcohol use at work) Coercion of auditors Breeches of intellectual property / copyright through piracy 27

Coverage (4) Money laundering Fraudulent collection of intelligence on competitors Unauthorised donations and sponsorship/ charitable contributions Political contributions and support, lobbying Inadequate record keeping Possession and use of arms by unauthorised staff Unauthorised surveillance Side-deals (extra-contractual liabilities) Safeguarding trademarks, patents, inventions and brands 28

Source of Procedure Standards of business conduct – Group level Complete procedure flow – available on intranet (strictly for employees) Periodic newsfeed updates to Administration Board and/or Consultative Committee In matters of urgency, requiring immediacy of action, Board members will be notified straight away Available anti-corruption certification 29

Ethics Audit measures Global tracking CAT – Compliant, Accurate, Thorough – phone interview methodology for external hotline administrators (e. g. Ethics. Point) Reactivity – processing duration up to 3 weeks: mention that compliance hotlines do not deliver emergency assistance Due diligence risk assessment toolkit Periodic formal reviews of contracts 30

Promotion of ethical conduct Anti-bribery screening Motivational headings / procedure slogans: “Tell us” (Vodafone), “Share your concerns” (GE), “Your personal pledge: Always do the right thing!” (Delphi), “Winning “We do the right thing” (P&G), “Playing the right way” (HP), our part, living our values” (GSK) Online repository with policies, procedures and guidelines written in all languages of countries where the MNE operates 31

Training on whistleblowing Encouragement to raise concerns about past, occurring or even potential (likely to happen) wrongdoing First point of contact for voicing concerns and denouncing wrongdoing is the line manager. Line managers are instructed to forward denouncements to a Designated Officer identified in the specific procedure Notification of outcome / feedback 32

Corrective action Remedial and enforcement measures by audit & compliance reviews Prescriptive confidentiality No material / financial reward for denouncers’ disclosure act Translation of denouncement – made by independent firm No pressure or influence is tolerated on persons involved in investigation Corruption risk assessment & screening reviews conducted annually Escalation procedures Statistics on compliance hotline allegations & resolutions 33

Path to Corporate Responsibility Simon Zadek - „Tomorrow’s History” What is leading responsible business practice? Beyond getting CSR policies, practices (e. g. „house rules”) in order, Companies need to stay abreast of the public’s evolving ideas about corproate roles Civil learning process & associated civil learning tool 34

5 -stage model – path to CSR (1) 1. Defensive „It’s not our job to fix that” When faced with unexpected criticism from stakeholders, media or civil activists. Defensive reactions include: outspoken rejections of allegations or denied link between corporate actions and mishaps („It wasn’t our fault”). Why: Protect against image attacks that affect in the short term sales, recruitment, productivity, brand capital 35

5 -stage model – path to CSR (2+3) 2. Compliance - „We’ll do just as much as we have to” – understood as a cost of running business, protecting reputation, reducing litigation risks. 3. Managerial phase - embed societal agenda in their core management processes, to achieve long -term gains By integrating responsible business practices into their daily operations (e. g. sales forecast, inventory, procurement incentives) 36

5 -stage model – path to CSR (4) 4. Strategic „It gives us a competitive edge” realigning strategy to contribute to long-term success. E. g. adoption of environmentally safer forms of mobility in automobile. Health consciousness programs implemented by Nestle (e. g. to decontaminatee water used in infant formula preparation – population education) or Always – P&G (teenagers’ sexual health education). To integrate CSR in core business strategies Gain first-mover / trendsetter advantage – enhance sustainable economic value 37

5 -stage model – path to CSR (5) 5. Civil – promote broad industry participation in CSR Realise gains through collective action – „We need to make sure everybody does it”. Beyond fair marketing- restrictive legislation for all alcohol producers – „drink responsibly” campaign. Forward thinking – metastrategy – reconsider the role of business in an open, stable global society The public „taste” / „fashion” is for businesses to become more invovled in addressing societal challenges (e. g. obesity, aging population, tobacco and alcohol consumption) 38

CSR learning curve It takes a learning curve – change in CSR vision cannot happen over night, but can be triggered or accelerated by image crisis (e. g. Nike use of child labour), due to cost-squeezer temptations Raising eyebrows – head-up news on corporate mis -conduct The chances to make money by being good must be created, not found 39

CSR partnership Alliances formed on CSR principles: Fair Labor Association, Global Compact, Ethical Trading Initiative Aim: to develop, monitor and comply with accepted labor standards underpinned by UN conventions Value customers focus on price and are generally less responsive to ethical propositions, especially suppliers from developing countries. Instead, it’s easier for companies to focus o the lowhanging fruit – employee morale or safeguarding the brand – defensive, not proactive. A deeper sense of CSR requires courageous leadership 40

How is „greenness” relevant to creating value for customers? How far up or down is „greanness” in the list of qualities people seek in the products they buy? You are only as green as your supply chain. The green challenge is about: Fostering a culture of sustainability from the top down Redesigning the supply chain for sustainability 41

Green challenge & criticism Use of ecolabeling to inform consumers Avoidance of transfer of proprietary or sensitive technology to emerging markets The need to cooperate not just with suppliers but with competitors Developing and managing standards when integrating suppliers 42

Green challenge & criticism Critics of CSR (libertarianism: Milton Friedman, Henderson) claim: Nothing is more effective that market mechanisms – markets cannot be wrong Corporations are solely responsible to their shareholders CSR is disruptive to the very essence of running business – competitive and innovative Greenwashing 43

Why not CSR? Philanthropy should be freely chosen, not outward Imposed CSR doctrine – subversive for free market It relies on the savior’s complex: captatio benevolentiae in disguise – ultimate purpose, though unacknowledged, is to protect corporate interest In fact, economic capital is partially transferred & converted to social capital 44

Application Procedure – CSR grants 1. Bucharest Running Club VISION We believe within a future world where sport will support each individual to go beyond its physical and emotional limits, beyond any material or financial constrain, contributing to its own and community life’s ideals fulfillment as well. 45

Case study - BRC MISSION Bucharest Running Club would facilitate individuals, communities and corporations to accomplish their personal goals through an active and freshly sport life style, offering opportunities to positively impact the humankind social network. We would leverage our passion and team spirit, our respect for others and for nature, within a strong and absolute fair play spirit, to achieve that. 46

Case study - BRC The fee for each race includes the amount to be donated to partnering NGOs. Each runner can choose a cause to support via the registration form. Adults and children who registered and paid for Family Run can register for free at Kids & Parents Run. Children who participate without parents (coming with a school or institution group) register free of charge. 47

Ambassadors + Mascot Greeny is a runner in the shape of a poplar leaf. The symbol is the expression of eco and civic spirit had by all the events organized by ABRC. The poplar is the most prevalent urban tree in the cities of Romania 48

BRC – NGO partnership 49

BRC – NGO partnership (2) 50

Competition Fields – „Made in Ţara lui Andrei” Community Development Sustainable initiatives that solve a social problem / need, by maximised impact and efficient use of resources and community-based opportunities Education for employability Sustainable projects aimed to enlarge Romanians’ access and participation to professional and technological education, aiming at skill development in most wanted vocational areas. They target young, as well as adults who need support for professional (re)integration, reconversion reskilling, upskilling, mediation and placement 51

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 52

Members of the Jury – Tara lui Andrei 53

Members of the Jury – Tara lui Andrei Eco-efficiency and eco-innovation 54

Members of the Jury – Tara lui Andrei Employability – “Meseriaşi pentru România” project 55

Responsibility – philosophical thoughts Aristotle: responsibility as assumed consequences of a choice Stoic approach: responsibility as wise precaution Kant: responsibility as free will & deliberate course of action – you cannot be responsible unless you are free 56

Emerging field of CSR A company is responsible for all of its impact on social and natural environment (Geoffrey Chandler) Howard Bowen (1953): Social Responsibility for Business: “a business person is obliged to obey policies, to make decisions and to follow guidelines according to society’s values and objectives” Dodging off CSR leads to gradually corroded social capital 57

Factors leading to CSR development Protest movements – critical paradigm: Ecologist, pacifist, feminist, unionist, antiracist, Protecting civil rights, decent work standards and consumers’ rights Corporate social responsiveness – required to respond to societal pressure, challenges and unrest / upheaval “Burden of morality”: society has modified its expectations on business environment (Carroll & Buchholtz, 2006) 58

Pyramid of corporate responsibilities (Carroll & Buchholtz, 2006) 59

Why should companies pay for externalities they generate? Innovation and technological progress lead to depopulation or overpopulation of some areas, disappearance of some trades, occupations & crafts or pollution Companies owe society to make up for this damage They afford to pay for externalities bec. They dispose of important resources Corporate social policy as answer to contesters of corporate legitimacy 60

Agency & stewardship 61

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 62

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 63

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 64

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 65

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 66

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 67

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 68

Eco-efficiency and eco-innovation Community projects that encourage and promote efficient, responsible use of natural resources and innovation in environmental protection Projects – voted by jury members and community supporters – financed by OMV Petrom with grants up to 5000 euro or 15. 000 euro, within an available budget of 200. 000 euro. Since 2013, „Ideas from Ţara lui Andrei” program has nation-wide financed over 40 projects implemented with a budget 360. 000€ 69