Chapter 10/11- CSR Flashcards
What is the Business Case for CSR?
Business Case for CSR:
- CSR activities can be used by organizations to obtain competitive advantage; (Unilever in India hygiene- Lifebuoy soap sales 10%) to reduce risk (especially reputational risk); to attract and retain talented employees; for innovation (e.g., mobile phone banking in Africa); and for sustainability (as a result of focusing on CSR activities).
- Governments have become more interested in CSR due to pressure from their citizens to protect the environment and improve quality of life, and for companies to take responsibility for the impacts of their business.
- Investors recognize the impact of CSR issues on success and take an organization’s CSR practices into consideration in their investment decision making.
- Shareholder trade associations (PLSA, IA, CalPERS, ICGN) have issued guidance on socially responsible investment for their members.
- ‘Greenwashing’ is the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, service, technology or company practice – which stakeholders and the media look out for.
- Impact of the millennial generation due to their characteristics of sharing views and opinions on social media, which has led to an overwhelming demand for CSR as the potential workforce and consumer base look to do business only with those organizations making a positive impact on society
What are the Categories of CSR Activity?
Categories of CSR Activity:
- Pet projects – personal interest of board members/senior execs, but offer minimal benefits to society or the organisation
- Philanthropy – usually take the form of large charitable donations to groups of people, institutions or individuals. Confers majority of benefit to society. Often little fanfare made so questionable as to the benefit to the organization making them.
- Propaganda – focused primarily on building the organization’s reputation with little real benefit to society (e.g., sponsoring large sporting events)
- Partnerships – usually create value for the organization by addressing major strategic issues or challenges which in turn leads to a long-term sustainable benefit for society
What are the different types of CSR Frameworks?
CSR Framework:
- UN Global Compact (2000) – 10 principles covering human rights, labor, the environment and anti-corruption
- The SIGMA Project - 2003 guidelines consist of a set of Guiding Principles related to five capitals: natural, human, social, manufactured, financial; and a Management Framework that integrates sustainability issues into core processes and mainstream decision making
- Equator Principles – a risk management framework adopted by financial institutions, for determining, assessing and managing environmental and social risk
- OECD Guidelines for Multinational Enterprises – including guidelines on general, employment and environment policies.
What is Integrated Thinking?
Integrated thinking: effective and efficient utilisation of the following six capital resources:
- Financial Capital
- Manufactured Capital
- Human Capital
- Intellectual Capital
- Natural Capital
- Social Capital
Avoid ‘silo effect’ – encourage holistic views.
What are business ethics?
Business Ethics- The application of ethical values to business behaviour and relevant to the conduct of individuals and the organisation. Ethics goes beyond legal requirements and is about discretionary decisions and behaviour guided by values.
What are the recommendations found in Principles B and E of the UKCGC and the Wates Principles 1? How does the Board achieve these recommendations?
Board actions to achieve these recommendations:
- Develop ethical values and reflect in a code of conduct/ethics
- Ensure values and code are communicated across the company and implement a training programme
- Ensure the company rewards behaviour in line with the values and code
- Ensure there is an environment within the company that employees feel they can raise unethical practices
- Ensure the code of conduct/ethics is reviewed from time to time to take into account changes in societal norms
How should you formulate a CSR or sustainability policy?
Formulating a CSR or sustainability policy-
- Agree CSR Values
- Establish company’s current position against those values and identify the gap
- Obtain support for the policy and identify responsibilities
- Develop realistic strategies and targets
- Implement these on a local and global basis
- Identify key stakeholders whose views the company wishes to influence
- Communicate the company’s targets, policies and activities to stakeholders
Define CSR/ Corporate Citizenship and Sustainability
CSR: ‘where companies integrate social and environmental concerns into their business operations and their interaction with their stakeholders on a voluntary basis’
- Corporate Citizenship – term was originally used in King Code II. Describes how companies should act in the same way as citizens of the countries in which they operate – to meet the countries’ legal, social ethical and economic responsibilities expected of its citizens. Requires companies to balance the financial needs of shareholders with the societal need of the countries in which they operate.
- Sustainability refers to an organisation focusing on its long-term survival. Requires a balance of requirements for operating their business without compromising the needs of future generations.
What is the Role of the Comapny Secretary in CSR?
Advising and assisting the board on:
- being socially responsible (assisting in CSR initiatives and setting targets and evaluating effectiveness, communication to employees and stakeholders, reporting, linking achievements to remuneration and other benefits)
- planning for sustainability (developing policies in line with objectives and resources available; developing business continuity and disaster recovery plans, developing indicators and evaluating effectiveness of policies, communication to employees and stakeholders) BCP developed inc Disaster Recovery Plan.
- building an ethical culture (developing a code of ethics, setting standards of behaviour, implementing and managing whistleblowing procedures, communication, monitoring compliance, reporting)
One key action in all of the above is for the company secretary to ensure that all these issues are included on the Board meeting agendas as frequently as required
Which are the 3 Regulations that have introduced Mandatory Annual CSR Reporting in the UK?
companies in their annual report and accounts:
- Companies Act 2006 (Strategic and Directors’ Report) Regulations 2013 – greenhouse gas emissions
The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016
- disclosure in Strategic Report on information on environmental, employee, social, human rights, anti-corruption and bribery matters
- under DTR listed companies required to disclose certain statements in their corporate governance report in relation to diversity
Companies (Miscellaneous Reporting) Regulations 2018 (effective for financial years starting on or after 1 Jan 2019) – companies to report on adoption of s.172 requirements within their Strategic and Directors’ Reports
What are the issues surrounding CSR and Senior Executive Remuneration?
CSR- Senior Exec Remuneration- CSR targets or achieving a certain status on a CSR index as part of performance criteria in bonus and incentive schemes for senior executives.
Boards should consider whether it is appropriate for their companies to set CSR targets for senior executives. Targets should only be set where a company has developed clearly articulated business cases for CSR initiatives, outlining how the initiative helps secure the overall sustainability of the company- Senior Exec’s can exploit vague targets.
What are the GRI Sustainable Reporting Standards- 3 Universal?
- GRI101: Foundation- Describes the Reporting Principles, explains the requirement for applying the Reporting principles, and sets of the ways that the GRI standards can be used.
- GRI102: General Disclosures- Provide contextual information about an organisation and its sustainability reporting practices under the headings: Organisations Profile, Strategy, Ethics and Integrity, Governance, Stakeholder Engagement Practices, Reporting Process.
- GRI103: Management Approach- how it manages the economic, environmental and social impacts related to a topic-specific standard.
- Aspects – should cover economic, environmental and social issues
- Boundaries – indicate whether consequences for each of the aspects affect the company internally or are felt outside the company’s boundaries
- Disclosures – there should be two types in a report:
- General standard disclosures which set the context for the report and are common to all types of company; and
- Specific standard disclosures being disclosures on management approach to sustainability issues and indicators which are quantitative measures of performance for each of the aspects
What is Integrated Reporting, and the IIRC Integrated Reporting Framework? What are its Advantages?
IIRC Integrated Reporting Framework- Establishes guiding principles and content elements for an integrated report- does not set benchmarks for assessing.
- Strategic Focus, connectivity of information, responsiveness and stakeholder inclusiveness, materiality and conciseness, reliability comparability and consistency.
- Business model, operating context/ risks and opportunities, strategic objectives, governance and remuneration, performance and future outlook.
The Corporate Reporting Dialogue- Created by IIRC to create dialogue and alignment between the key sustainability standard setters and framework developers- continuing dialogue between financial reporting standard setters- towards integration.
What are the CSR Indices?
CSR Indices:
- Dow Jones Sustainability Indices first published in 1999- Companies must apply to qualify for inclusion in an index
- FTSE4Good Index Series- for investors interested in social responsible investment- to be included in an index companies need to demonstrate that they are working towards environmental management, climate change mitigation and adaptation, countering bribery and upholding human and labour rights.
- Business in the Community (BiTC) Corporate Responsibility (CR) Index, launched in 2002 and takes the form of an online survey where companies follow a self-assessment process. All submissions must be signed off at main board level.
What is Triple Bottom Line Reporting?
Triple Bottom Line Reporting-accounting framework including the social/environmental performance as well as financial performance.
Economic
- Revenue
- Profit
- Dividend
- Market Share
Social
- Employee Diversity
- Injury rate per 1000 employees
- Community development in education and health
Environmental
- Reducing consumption of materials
- Reducing energy use
- Minimizing release of toxic materials
- Improving recycling
- Maximizing use of renewable resources
- Extending life of a product
