Unit VIII Case Study

DBA 7035, Business, Government and Society 1

Course Learning Outcomes for Unit VIII Upon completion of this unit, students should be able to:

6. Explain approaches to environmental and product safety protections taken in the United States. 6.1 Identify the approaches to environmental and product safety protections taken by a specific

company. 6.2 Compare the environmental and product safety protections taken by a company in the United

States to those taken in other countries.

7. Analyze the influence of governmental political activities of different countries on international trade policies and economic incentives. 7.1 Describe the impact of the Global Reporting Initiative (GRI) standards on international trade. 7.2 Explain how the GRI standards are affected by the political activities of a specific country. 7.3 Determine if there are ways to make the GRI better.

Reading Assignment Chapter 11: Sustainability Issues Chapter 12: Social Responsibility in a Global Environment

Unit Lesson Introduction In Unit VIII, we will develop the concept of sustainability that was introduced earlier in the course. Sustainability is about understanding and respecting the natural environment. In addition, it is about interactions between nature, individuals, and business strategies. Increasingly, the issue of sustainability has been high on the public agenda. In particular, this unit looks at the international issues that we see related to sustainability. Sustainability: The Global Context As an example, on September 25, 2015, countries of the United Nations adopted a set of goals to end poverty, protect the planet, and ensure prosperity for all as a part of a new sustainable development agenda. These goals included specific measures and targets to assist in achieving the goals. Specifically, the United Nations’ Sustainable Development Goals (SDGs) include, for example, ending hunger; promoting healthy lifestyles; ensuring education; promoting gender equality; and ensuring water, energy, and economic growth (United Nations, 2016). For the complete list of these goals, please click the link below. United Nations. (n.d.). 17 goals to transform our world. Retrieved from

http://www.un.org/sustainabledevelopment/ Other international organizations have developed ambitious goals designed to assist firms operating globally to meet a set of voluntary threshold standards. See, for example, the Organization for Economic Cooperation and Development’s OECD Guidelines for Multinational Enterprises, which can be accessed by clicking the link below.

UNIT VIII STUDY GUIDE

Sustainability Issues and the Global Context

DBA 7035, Business, Government and Society 2

Organization for Economic Cooperation and Development. (2011). OECD guidelines for multinational enterprises. Retrieved from http://www.oecd.org/daf/inv/mne/oecdguidelinesformultinationalenterprises.htm

These guidelines cover key areas impacting multinational corporations (MNCs) including human rights, employment and industrial relations, the environment, bribery, consumer interests, science and technology, competition, and taxation. Certainly, these goals are far-reaching, and they represent an agenda that is aimed at addressing a number of key global environmental concerns, including atmospheric issues such as air pollution, global warming, and coal and carbon emissions. Other key areas of concern include water issues such as water quality (pollution) and quantity. Land issues of concern include pollution, waste management, deforestation, and urban sprawl. Finally, biodiversity and genetically modified food are growing concerns. In response to issues of this nature, the United States has adopted a number of laws to guide societal and business conduct (see Table 11.5 on pp. 382–383 of your textbook). In large part, the efforts of both the OECD and the United Nations are aimed at developing common globally applicable solutions to what are viewed as common problems impacting the whole world. As firms continue to globalize their operations, standards are important The United Nations and the OECD standards assist in building best practice models for all organizations. As a specific example, bribery and corruption are viewed as significant problems impacting businesses and society generally by both the United Nations and the OECD. In response, an organization called Transparency International (TI) was created. TI is a volunteer organization with offices in more than 100 countries. TI annually ranks companies based on a corruption index. The goals of TI include creating common international anti-corruption standards, prosecuting corrupt leaders and seizing their illegally gained wealth, monitoring national elections to ensure that there has been no corruption, and holding companies accountable for their actions and operations at home and abroad (TI, n.d.). As business has become increasingly globalized, there have been efforts to recognize and support a more structured and consistent global system that highlights the critical importance of sustainability. For example, in Table 12.2 on p. 410 of the textbook, a series of global principles are presented; these include the following components:

 the importance of accountability and transparency,

 the need to comply with all laws,

 developing stakeholder trust and ethics,

 respecting the communities within which companies operate,

 promoting and using sustainable practices,

 ensuring employees are treated equally and that they receive fair compensation,

 providing safe products for customers,

 respecting basic human rights,

 supporting economic viability of all stakeholders, and

 having respect for the property of others (Ferrell, Thorne, & Ferrell, 2016). An agency taking an active interest in global sustainability issues is the International Labour Organization (ILO). Initially, the ILO produced a Declaration of Principles for Multinational Enterprises and Social Policy in 1977. Fundamentally, these principles were designed to provide voluntary guidance to MNCs and governments. Specifically, the guidance was created to provide a framework for MNCs that operate in developing countries. In these types of countries, there was a need to manage job creation and ensure that MNC’s provide equal opportunities for employees, provide stable employment and training for employees, and ensure the right of employees to organize with good wages and benefits—particularly in developing nations (Buchner, 2012). The ILO advocates a common set of international labor guidelines that are viewed as fundamental. Specifically, these fundamental principles include the freedom of association, including the right to collective bargaining; eliminating all forms of forced or compulsory labor; the abolition of child labor; and the elimination of discrimination in all forms (ILO, n.d.-b). As noted, one key area of concern with respect to the global labor force is related to children in the workforce. Many countries do treat child labor very differently. In fact, the ILO estimates that there are more than 168 million children forced to work in the world, and more than half of them are in work that can be defined as hazardous (ILO, n.d.-a). As a result, the ILO looks to develop a consistent standard that respects the rights of

DBA 7035, Business, Government and Society 3

children globally. See, for example, the ILO video about child labor practices in the suggested reading section of this unit. One common standard that has developed to provide a common platform internationally is that provided by the International Standards Organization (ISO). An example is ISO 26000, which was prepared as a set of guidelines for the adoption and use of corporate social responsibility (CSR). In this case, ISO is a guide for companies and organizations interested in quality and sustainability activities (Buchner, 2012). More information on the ISO 26000 guidelines and a good introductory video to this important standard can be accessed by clicking the link below. International Standards Organization. (n.d.). ISO 26000 - Social responsibility. Retrieved from

http://www.iso.org/iso/home/standards/iso26000.htm Of course, it is import to measure, report, and correct sustainability initiatives and functions. These functions are accommodated by the development of the Global Reporting Initiative (GRI). The GRI is a network of companies and stakeholders that voluntarily follow specific reporting requirements to provide all stakeholders with a consistent and clear perspective of sustainability initiatives. In addition, the GRI includes a set of best practice standards for firms to consider as they pursue global operations. Also, the GRI framework allows for benchmarking and comparing performance over time (GRI, n.d.). The intent of the GRI is to encourage continuous improvement and to ensure that there is a consistency of approach in all parts of the globe. The GRI represents a voluntary effort, and there may be concerns that many firms simply do not participate in a voluntary effort such as the GRI. An example of a firm that uses the GRI guidelines and report format is Starbucks. Of course, Starbucks is active internationally, and they use the GRI as a method to openly report on their operations and to drive improvements (Starbucks, 2011). Conclusion As illustrated in this unit, there are many organizations interested in building more consistent equitable and fair international guidance with respect to the operation of business. The United Nations, the OECD, TI, ILO, ISO, and the GRI all have a role to play; the extensive nature of this list of organizations reflects the importance of this effort. Firms continue to look for growth opportunities, and this search increasingly leads them to assess and develop global options. Technology changes, including improvements to transportation, make global alternatives for firms much more viable. As firms do look abroad, a key consideration is to ensure that local interests and needs are understood and accommodated. Firms increasingly view themselves as members of the communities within which they work. Firms have adopted and adapted sustainability as a way to be more socially responsible and to develop and maintain competitive advantage in an increasingly turbulent and interconnected global economy. Indeed, a 2013 Boston College Center for Corporate Citizenship and Ernest and Young survey revealed that more than 50% of respondents issuing sustainability reports reported that those reports helped improve corporate transparency and build public trust as well as the reputation of the firm (Boston College Carroll School of Management, 2013). One important point in developing a common standard is clearly related to the GRI. The GRI is a process aimed at ensuring that there is a fair and consistent application of CSR initiatives globally.

References Boston College Carroll School of Management. (2013). Value of sustainability reporting. Retrieved from

http://www.ey.com/Publication/vwLUAssets/EY_-_Value_of_sustainability_reporting/%24FILE/EY- Value-of-Sustainability-Reporting.pdf

Buchner, L. (2012). Corporate social responsibility and sustainability from a global, European and corporate

perspective. Corporate social responsibility and sustainable governance. Eurotimes, 1341–55.

DBA 7035, Business, Government and Society 4

Ferrell, O. C., Thorne, D., & Ferrell, L. (2016). Business and society: A strategic approach to social responsibility and ethics (5th ed.). Chicago, IL: Chicago Business Press.

Global Reporting Initiative. (n.d.). About GRI. Retrieved from

https://www.globalreporting.org/information/about-gri/Pages/default.aspx International Labour Organization. (n.d.-a). Child labour. Retrieved from http://www.ilo.org/global/topics/child-

labour/lang--it/index.htm International Labour Organization. (n.d.-b). Conventions and recommendations. Retrieved from

http://www.ilo.org/global/standards/introduction-to-international-labour-standards/conventions-and- recommendations/lang--en/index.htm

Starbucks. (2011). Global Reporting Initiative performance indicators. Retrieved from

http://assets.starbucks.com/assets/ed09de88685b473db767aab9cea54abf.pdf Transparency International. (n.d.). Overview. Retrieved from

http://www.transparency.org/whoweare/organisation/ United Nations. (2016). Sustainable development goals. Retrieved from

http://www.un.org/sustainabledevelopment/

Suggested Reading In order to access the following resource, click the link below: The video below was referenced in the Unit VIII Lesson. It details the report on child labor created by the International Labour Organization. International Labour Organization. (2010, May 7). ILO reports on child labour globally [Video file]. Retrieved

from https://www.youtube.com/watch?v=yfKJ8Mof6lU

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. Navigate to the International Labor Organization (ILO) website, which can be accessed by clicking the link below: http://www.ilo.org/global/lang--en/index.htm What do you see as the role of the ILO? Why is it important to us?