CSR Flashcards
Why do/ should companies care about sustainability
Why do they report sustainability aspects
- Increasing pressure on companies to be sustainable
to report transparently on their sustainability performance!
Increasing regulatory requirements for reporting sustainability aspects
Society and media publicly denounce real (or supposed ) grievances
Increasing use of environmental management systems , sustainability standards , reporting guidelines , labels
Increasing initiatives on life cycle based analysis of products/organisations with potential influence on policy (e. EU PEF/OEF)
Companies and their role for sustainability
- 2015: Sustainable Development Goals (SDGs
– Goal 12: Ensure sustainable consumption & production patterns - Target 12.6: Encourage companies, especially large and transnational companies, to adopt
sustainable practices and to integrate sustainability information into their reporting cycle
Why is the life cycle perspective relevant for companies
- Environmental impacts , social impacts and costs often occur in early stages of the supply chain
Activities and products in the supply chain have a significant influence on environment and society and thus on sustainable development!
What is Corporate Social Responsibility (CSR)
- CSR is a concept whereby “companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders”
- Goal is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on
– Environment (e.g. pollution prevention, resource efficiency)
– Consumers
– Employees (e.g. training, human rights, equality, health)
– Communities (e.g. community development)
– Stakeholders etc.
Benefits of CSR
For enterprises…
Encourage more informed decision making processes
Improve the organization’s risk management practices , safety and health of workers & the organization’s competitiveness
Achieving savings associated with increased productivity & resource efficiency, lower
energy & water consumption, decreased waste, recovery of valuable by products
– Enhance reputation of the organization, employee loyalty, foster public trust
→ support an organization’s social licence to operate
For the society/economy…
More sustainable and innovative companies
A more sustainable economic system
European
Commission (EC) Strategy on CSR
- Today, >thousands of companies produce sustainability reports voluntarily)
- From 2017 on… sustainability/ CSR reports become mandatory for companies in the EU
Applies to publicly traded companies with >500 employees
Must report on environmental, social and employee related , human rights, anti corruption and bribery matters
ISO 26000 (2010)
Standard ISO 26000: 2010
Social responsibility
Recognized international standard for CSR (but with no formal act of legislation)
- Provides guidance on how businesses & organizations can operate in a socially responsible way
– Helps clarify what social responsibility is & helps to translate principles into actions
– Shares best practices, globally & addresses all types of organizations
Social responsibility (SR) core subjects (Clause 6)
- 7 core subjects should be addressed to define the scope of a company´s social responsibility & to identify relevant issues &set its priorities
Economic aspects & aspects relating to gender, health and safety & the value chain, are dealt with throughout these core subjects (where appropriate)
Global reporting Initiative (GRI)
- International, independent organization
- Helps businesses, governments etc. to understand and
communicate the impact of business on critical
sustainability issues , such as climate change or human rights - Produce standards for sustainability reporting, the GRI standards
(created through an internat. multi stakeholder, consensus based process) - Have strategic partnerships with international organizations, UN Global Compact, UNEP, ISO
Summary CSR
CSR ( reports ) increase transparency can support the shift to more sustainable companies but also bare the risk of greenwashing
- CSR concept: companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders”
– Covers at least: human rights, labour and employment practices, combating bribery and corruption and environmental issues)
– Involves many assessment and management tools (e.g. LCA)
– Gains increasing importance (e.g. becomes mandatory in the EU in 2017)
– Lots of guidance is available (e.g. GRI for but implementation varies significantly , e.g. because
*it is voluntary & flexible - data is missing /not available for the whole supply chain
Sustainability rating of companies
- Factors
- Weighting
- Criteria
- Data collection
- Transparency
Sustainability rating of companies - Examples
- Dow Jones Sustainability Indices:
Benchmark for sustainability, tracks the stock
performance of the world’s leading companies
in terms of sustainability criteria
–> Economic, Environmental, Social - FTSE4Good Index Series:
Ethical, benchmark indexes, measuring the
performance of countries with ESG practises
–> Governance, Environmental, Social - Morningstar Sustainability Rating for Investment Funds
Rating for organisations with regard to
environmental, social and governance chances and risks - Corporate Sustainability Index (ISE):
Comparative analysis of the corporate
sustainability performance of companies listed on B3
–> General, Nature of Product, Corporate Governance, Economic and financial, Environmental, Social, Climate Change
Corporate Sustainability Assessment
= is an assessment of the company’s sustainability performance. It results in a total ESG score
Criteria Definition:
General criteria 50%
- Industry specific criteria 50%
Environmental Dimension:
* Environmental Reporting
* Industry Specific Criteria (e.g. eco design, product labelling)
Social Dimension
* Social Reporting
* Human Capital
Development
* Labour Practice Indicators
* Industry Specific Criteria (e.g. community programs)
Economic Dimension
* Risk and Crisis Management
*Corporate Governance
* Codes of conduct
* Industry Specific Criteria (R&D spending)
Weighting
* Dimensions: consists of 6-10 criteria
* Criterion: 2-10 questions
Question score
Total sustainability score
𝑇𝑜𝑡𝑎𝑙𝑠𝑐𝑜𝑟𝑒=Σ(𝑄𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠𝑐𝑜𝑟𝑒𝑠𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑∗𝑄𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑤𝑒𝑖𝑔ℎ𝑡∗𝐶𝑟𝑖𝑡𝑒𝑟𝑖𝑜𝑛𝑤𝑒𝑖𝑔ℎ𝑡)
Method: assess value, text, documents –> weighted data points (100 questions) –> ave. 23 critera scores (weighted question scores) -> 3 dimension scores (ESG, weighted criteria score) -> 1 ESD-Scroe (Sum of weighted dimension scores)
Sustainability rating systems: potential benefits
- Setting organizations and projects’ triple bottom line
- Increased transparency
- Performance benchmarking & continuous improvement
(impact reduction, risk/opportunity management, innovation, sustainability targets) - Engagement of employees and stakeholders
- Obtaining feedback on performance
- Companies as pioneers and leaders of the way
- Reputational benefits
Sustainability rating systems: potential threats
- Different understanding of the word ‘sustainability’
link of the used indicators (e.g. leadership diversity, safety, productivity, innovation, capacity) is not always clear - Not enough transparency, i.e. not all methods for the rating calculation are disclosed
- Risk of ‘greenwashing’
- Reporting becomes too burdensome value chain assessments are too complex
- Capital markets need condensed information to understand sustainability reporting
