MSC Strategy Presentation
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4GlobalizationSustainableDevelopmentandSocialResponsibility.pptxChapter 4 Sustainable Development and Social Responsibility
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs
For instance, firm growth should not come at the expense of using child labor
Nike in Pakistan
Sustainable Development
Brundtland Report, United Nations World Commission on Environment and Development (1987).
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Are Global Corporations Bad Global Citizens ?
Destruction of the global ozone layer (50% of greenhouse gas emissions)
Pollution
Persistent pollutants
Pollution-intensive industries (e.g., soft drinks, mining)
Unsustainable agriculture practices
Deforestation (e.g., L’Oreal, Mars, Kraft Heinz, PepsiCo, Colgate-Palmolive are often blamed)
Over-fishing
Noncompliance with accepted labor practices
Corruption
Political backing of repressive regimes
Sources: Various NGOs (Corpwatch, Transparency International, Greenpeace..)
Often blamed for:
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Global CO2 Emissions
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Source: Data from United States Environmental Agency’s Climate Change Indicators, 2017
Temperature change worldwide 1990-2014: Earth surface (land and oceans)
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CORRUPTION
‘The abuse of entrusted power for private gain’
Transparency International
The cost of corruption equals more than 5% of global GDP with over US$ 1 trillion paid in bribes each year
Corruption is costing to global economy close to $4 trillion every year
OECD & World Economic Forum
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Sources: Transparency International :https://www.transparency.org/research/cpi/overview
Index refers to corruption in the public sector.
Lowest Corruption
Highest Corruption
Corruption Perception Index (CPI)
(From 0= High Level of Corruption to 10= Highly Clean)
| 1 | Denmark | 9.1 |
| 2 | Finland | 9.0 |
| 3 | Sweden | 8.9 |
| 4 | New Zealand | 8.8 |
| 5 | Netherlands | 8.7 |
| 5 | Norway | 8.7 |
| 7 | Switzerland | 8.6 |
| 8 | Singapore | 8.5 |
| 9 | Canada | 8.3 |
| 10 | Germany | 8.1 |
| 10 | Luxembourg | 8.1 |
| 154 | Yemen | 1.8 |
| 158 | Haiti | 1.7 |
| 158 | Guinea-Bissau | 1.7 |
| 158 | Venezuela | 1.7 |
| 161 | Iraq | 1.6 |
| 161 | Libya | 1.6 |
| 163 | Angola | 1.5 |
| 163 | South Sudan | 1.5 |
| 165 | Sudan | 1.2 |
| 166 | Afghanistan | 1.1 |
| 167 | North Korea | 0.8 |
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Low
Corruption
High
Corruption
Corruption and Economic Development
Corruption Perception
Index
GDP per capita (constant 2005 US$)
Logarithmic Scale
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Causes of Corruption
Lack of institutional checks and balances and information
Insufficient funding of public services
Social and cultural factors (e.g., ethical tendency of individuals in a society)
Abundant natural resources
Industry
In certain industries such as oil & gas as well as financial services, corruption is more common
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Effects of Corruption
DIRECT EFFECTS
Discourages domestic and foreign indirect investment
Reduces the productivity of public investments
Reduces the collection of taxes
INDIRECT EFFECTS
Reduction in work productivity as a result of demotivation
Lowered trust & loss of integrity
Corruption money is often linked to criminal and terrorist activities
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What is Corporate Social Responsibility?
Concerns how firms relate to and impact society’s needs and goals
Concerned with firm’s operational behavior
and its impact on surrounding society
Beyond philanthropy and compliance with the law
Source : From UNCTAD, The Social Responsibility of Transnatioonal Corporations, WIR, 1999
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Reduction in energy intensity
Enhancement of recyclability
Maximum use of renewables
Extension of product durability
Eco Efficiency Actions
Source : Lehni: ‘Eco-efficiency: Creating More Value with Less Impact,’
World Business Council for Sustainable Development, Geneva, 2000
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Some arguments given by some global managers
to justify corruption
‘What is legal can be done’
‘Competitive forces pushed us into corruption – all of
our competitors do it’
‘Corporations are economic agents and it is
not their duty to substitute for governments’
« We do not acknowledge the notion of Social Responsibility as defined by some NGOs…We comply with the laws of countries. »
Brian Flannery
Science Strategy and Programs Manager
Exxon Mobil, Nov 2000
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Anti Corruption Measures For the Public Sector
Issue and implement anti-corruption legislation
Establish an enforceable code of conduct for public employees
Simplify regulations and procedures
Limit or eliminate administrative authorizations being in the hands of one or a few officials
Set up a system of transparent reporting and control
Do not allow tax reduction for non-transparent money transfers
Source: United Nations Convention Against Corruption
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Measures presented at the Caux Round Table Global Dialogue September 2000 in Singapore.
The Caux Round Table commends them for consideration by business corporations
Clearly articulated written policy prohibiting any paying or receiving of bribes
Implement this policy with due care and take appropriate disciplinary measures
Provide training for employees to carry out the policy correctly
Record all transactions fully and fairly
Conduct internal audits to assure that all payments made and received are proper
Have the annual report from the step above openly audited
Anti-Corruption Measures For the Private Sector - 1
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Require all agents of the firm to affirm that they have neither made nor will make any improper payments
Require all suppliers of the firm to affirm that they have neither made nor will make any improper payments
Establish a monitoring and auditing system to detect any improper payments
Establish a system to allow any employee or agent to report any improper payment without fear
Anti-Corruption Measures For the Private Sector - 2
Measures from Caux Round Table Global Dialogue September 2000 . The Round Table commends them for consideration by businesses
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Child Labor
Concerns in the world around 168 million children from 7 to 17
Figures from UNICEF
Mainly in the following industries:
Agriculture
Chemicals
Mining
Also:
5.7 million engaged in forced labor
1.8 million in prostitution
0.6 million in illicit activities
0.3 millions in armed conflicts
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Human Rights
Human rights are being abused in countries where the following are common:
No respect of legal procedures or litigation
Arbitrary detention of political opponents
Child labor
Forced labor
Ethnic, religious, sexual discrimination
Global firms may be confronted with the prospect of working in and with such countries
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Codes of conduct
Environmental and social information (CRS reports)
Enforcement of minimum environmental standards
Design of incentive systems that favor sustainable development standards
Source: points from SAM Group in Hollidays, Schmidheiny and Watts, Walking the Talk, Greeleaf Publishing, 2002
Good Practices
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‘Doing well by doing good’?
Does that matter?
| Annualized Return | S&P Index | Dow Jones Global Sustainable Index (DJSI) |
| 1 year | 11.91% | 14.32% |
| 3 year | 8.84% | 8.63% |
| 5 Years | 14.60% | 13.00% |
| 10 years | 6.92% | 5.96% |
Source: Nuvven Investment, Responsible Investing: Delivering competitive performance , July 2017
https://www.tiaa.org/public/pdf/ri_delivering_competitive_performance.pdf
Socially Responsible Investing:
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