Social Responsibility Regional trends, issues

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Social ResponsibilityRegional trends, issues
practices
ISO Social Responsibility WorkshopDubai Monday 9
July 2007

• Imelda Dunlop
• Managing Director
• Business Principle FZ LLC

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What is a responsible company?

• The basics
• be profitable to survive
• meet legal requirements
• And also
• follow responsible business practices
• respect human rights
• respect suppliers and business partners
• behave ethically and apply consistent standards
• not harm the environment
• contribute to sustainable economic and social
  development

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Drivers of SR

• Europe
• NGO pressure
• Consumer pressure
• Regulatory requirements
• League tables (peer pressure)
• Competitive advantage
• Demands on transparency and governance
• Investment funds

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Regional SR Drivers

• Middle East
• Growing investor expectations
• Increasing media interest
• Brand leadership positioning
• Strong traditions values
• Local employment needs
• Consistency in standards
• Trade and market reform
• Vision of business locations

• Europe
• NGO pressure
• Consumer pressure
• Regulatory requirements
• League tables (peer pressure)
• Competitive advantage
• Demands on transparency and governance
• Investment funds

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Regional challenges and priorities

• Two priority issues traditionally most closely
  linked with SR in the minds of regional business
  leaders
• Philanthropy
• The employment of nationals

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Philanthropy

• SR is synonymous with philanthropy in the region
• Strongly driven in the region by media attention
  on international disasters eg. Asian Tsunami,
  Lebanon war
• Few companies align corporate giving with
  strategic objectives
• Deeply intertwined with Zakat. Most giving occurs
  during the Holy Month of Ramadan.
• Few companies drive employee volunteering efforts.

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Employment of nationals

• Regional employment challenge over the next
  decade
• High population growth rates
• Young populations
• High youth unemployment levels
• Insufficient job growth to accommodate expected
  workforce entrants
• National employment targets for different
  industries, with fines and other penalties for
  failure to meet quotas

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Rhetoric vs Reality

• 2006 research in UAE showed substantial gap
  between awareness of SR concepts and actual
  practice
• 72 of managers are highly or very highly
  aware, while
• 24 undertake any form of SR related reporting
• 30 have any policy related to employee work-life
  balance
• 17 consulted any form of international standards
  for effective social reporting

Source Dubai Ethics Resource Centre (DERC)
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Approach to SR in region
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Systematic approach to social responsibility

• Communicate clear values principles
• Show Board commitment and leadership
• Align SR strategy with business strategy
• Engage stakeholders
• Focus on key material issues
• Identify impacts, risks, opportunities
• Set standards
• Allocate responsibilities accountabilities
• Develop policies
• Set performance objectives controls
• Carry out programme reviews
• Report internally and externally

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Stakeholder engagement

• Customers
• price value of products
• quality issues
• complaints handling
• advertising values

• Employees
• wage levels
• health and safety
• training
• recruitment policies
• living environment

• Investors
• return on investment
• corporate governance
• honesty
• transparency

• Suppliers
• jobs sustained
• technology and skills transfer
• timely payment of bills

Organisation

• Communities
• charitable gifts
• community investment
• willingness to consult and listen

• Environment
• a proxy for future generations

• Authorities
• payment of taxes duties
• fair transfer pricing
• regulatory compliance

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SR and value creation
Source Johnson Johnson
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Some key regional SR issues- Local economic
and social development- Environmental impact-
Workplace practices - Business standards and
supply chain
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Local economic and social development
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Local economic and social development

• Youth focus
• Infrastructure development health, education,
  libraries, emergency services
• Community building
• Local cultures and traditions
• Sports
• Building of institutional capacity
• Entrepreneurship, social entrepreneurship and
  micro-financing
• Philanthropy

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Corporate spheres of influence

• CORE BUSINESS ACTIVITIES
• produce safe and affordable products
• influence ethical supply chains
• generate income and investment
• create jobs
• develop human resources
• build local businesses
• support technology development and transfer

workplace
marketplace
supply chains

• ENABLING FRAMEWORK ACTIVITIES
• work with governments to improve infrastructure,
  healthcare, education, quality
• address environmental, regulatory and fiscal
  policies
• engage in dialogue

community
enabling framework

• COMMUNITY ACTIVITIES
• support education, training, youth development,
  sport
• transfer skills technologies
• build capacity of community leaders and social
  entrepreneurs
• partner in social, health and community
  programmes
• support arts culture

Source based on Business and the Millennium
Development Goals, IBLF
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Business and Youth in the Arab World examples
ALJ Group Employment and enterprise
creation Saudi Arabia INJAZ Business skills
training region-wide
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Business and Youth in the Arab World Key
initiative success factors

• Exhibit visionary leadership in corporate
  citizenship
• Utilise core competencies, drawing on business
  skills
• Apply business principles
• Involve employees
• Communicate effectively
• Ensure local ownership and relevance
• Leverage the power of partnership
• Implement a phased roll-out plan.

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Environmental impact
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Environmental impact

• UAE has worlds highest per capita ecological
  footprint1
• From traditional economies to modern, highly
  urbanised industrial
• countries
• High resident population growth
• Rising energy demands water consumption
• Imported goods and food
• Waste generation, including industrial and
  hazardous waste
• Loss of wildlife habitats
• Only 46 of UAE firms have a policy on
  environmental impact2

Source 1 Living Planet Report 2004
2 Corporate Responsibility Awareness in UAE
DERC
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Environmental management

• Set environmental standards
• Make management and purchasing decisions which
  minimise negative environmental impacts and costs
• Reduce emissions minimise waste use resources
  in a sustainable way REDUCE RE-USE RECYCLE
• Carry out pre-investment environmental/
  ecological impact assessments and audits
• Develop action plans for key issues for your
  industry, such as global warming, ozone
  depletion, landfill use, sustainable energy

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Some UAE examples

• Masdar initiative in Abu Dhabi (www.masdaruae.com)
  
• Research education on sustainable energy
• Investment fund for companies, technologies and
  entrepreneurs
• Will develop a 6 sq km zero-carbon zero-waste
  city by late 2009
• Green (environmentally friendly) buildings
• Emirates Green Building Council
• Pacific Controls building LEED Platinum-rated
  head office at Techno Park- solar energy for
  lighting fresh air cooling
• Recycling
• Emaar Earthwatch
• DIFC paper toner recycling

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Workplace practices
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Responsibility to employees

• One of the biggest impacts organisations have on
  community is through employment
• Generating jobs that are obtained by fair and
  open means
• Providing safe, healthy and fair working
  conditions
• Providing pleasant living environment -
  accommodation, facilities, sports
• Open and transparent two-way communication
• Training and empowering employees
• Work-life balance
• Health and fitness
• Harvard Business School study found that firms
  practicing high performance work practices
  experienced a 14 market premium over industry
  peers

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Diversity in the local market
72 of companies report rules in place to prevent
discrimination yet 65 believe it is legitimate
to discriminate on the basis of age and 41 with
regards to disability
Source Corporate Responsibility Awareness in
the UAE DERC
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Health safety in the workplace

• Health and safety standards adopted locally are
  mostly motivated by legal compliance
• Lack of widespread understanding of worker health
  and safety beyond compliance companies find
  little value in promoting a healthier workplace
  than required by law
• Workers often unaware of (and sometimes unwilling
  to) follow basic safety guidance eg. wearing of
  protective equipment

Source Corporate Responsibility Awareness in
the UAE DERC
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Working and living conditions

• Leading and laggard companies
• Productivity and loyalty benefits
• Enforcement of laws on working and living
  conditions
• New initiatives eg. midday break
• Increased media attention

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Business standards and supply chain
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Business standards

• Corporate governance
• Transparency
• Reporting
• Responsible business practices
• Code of conduct
• Procedures eg. disciplinary
• Non-discrimination
• Ethical behaviour
• Culturally/ locally appropriate

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Vision and Values Hearts and Minds

• Systematically link core values into strategic
  goals, day-to-day decision making processes and
  business practices
• Use in orientation for new employees
• Use in reviews and performance development
• Measure employee commitment and motivation and
  listen to concerns
• Lead by example
• Training, team building
• Take action on concerns expressed
• Communicate internally eg. training, briefings,
  notice boards, internal magazines, intranet, code
  of conduct
• Communicate externally eg. website, annual
  report, specific reports

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Supply chain issues

• Impact on poverty
• Responsible procurement
• Human rights
• Corruption
• Contractor worker rights exploitation, living
  conditions, workplace standards, health safety
• Child labour in supply chains (Nike and Gap
  supply chain auditing transparent reporting on
  contract factories location performance)
• Huge risk of getting it wrong consumer
  boycotts, campaigns, reputation damage

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Human rights

• The right of every individual to liberty, freedom
  of association and personal safety.
• Universal Declaration of Human Rights (UDHR)
• ILO core labour standards

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Challenges in implementing supply chain standards

• Products are sourced from a myriad of countries
  and factories which face different laws, customs,
  social, environmental and cultural conditions and
  standards.
• The diffuse nature of supply chains challenges
  firms in creating capacity, and engaging and
  training workers and factories in responsible
  management.
• Success of such strategies varies on the ground
  and can impact implementation of the program
  greatly.

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In conclusion

• Very few organisations in the region to date have
  had a systematic strategic approach to SR
• This is changing fast
• Great opportunities to lead
• Some outstanding examples of companies making a
  difference
• Huge growing interest
• Understanding and capabilities are getting more
  sophisticated

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Key take away points

• Make a long-term commitment
• FOCUS
• Consider the internal as well as the external
  aspects of SR
• Dont get stuck in a SR model which is based
  solely on philanthropy
• Look for opportunities to build brand,
  reputational trust, competitive advantage and
  reduce risks
• Dont silo SR issues look across stakeholder
  groups for win-win business benefits, from
  markets to employees to supply chains
• Match expertise and resources with what
  stakeholders value and prioritise
• Be open to partnerships
• Communicate internally and externally