1. TODAY – Session III Presentation – Institutional Environment Break
Assignment 4 – NGO/NPO Heroes

2. _____________________________ The Institutional Environment of CSR
Session III
_____________________________
The Institutional Environment of CSR

3. Introduction The institutional environment of CSR is extremely broad
A variety of principles, guidelines, standards, schemes, etc. are used by the business community all over the world
These tools provide frameworks for responsible behavior by companies of all kinds (SMEs, MNCs... ); they facilitate the implementation of CSR approaches
They also help governments and international organizations to define their expectations regarding business’ conduct
Given the vastness of this institutional environment only some of its components will be discussed

4. The institutional environment of CSR
1) International declarations of principles
2) Multi-stakeholder initiatives
3) Laws and regulations
4) CSR standards
5) Eco-labeling schemes
6) Extra-financial rating agencies
7) Sustainability-oriented stock market indices
8) Specialized networks, resource centers, newsletters, consultancies… (the “CSR industry”)

5. 1) International Declarations of Principles
OECD Guidelines for MNCs
United Nations Global Compact
Principles for Responsible Investment
Equator Principles
Caux Round Table Principles for Business
Global Sullivan Principles

6. OECD Guidelines for MNCs (1)
The Organization for Economic Cooperation and Development is a unique forum where 34 governments work together to address economic, social and environmental challenges of globalization
The OECD Guidelines are the most commonly adhered to by 41 countries
OECD member coutries include: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States

7. OECD Guidelines for MNCs (2)
The Guidelines are divided into 10 main sections:
Concepts and Principles
General Policies
Disclosure
Employment and Industrial Relations
Environment
Combating Bribery
Consumer Interests
Science and Technology
Competition
Taxation

8. OECD Guidelines for MNCs (3)
Each section / principle is accompanied by implementation guidelines and other comments
For example, Principle V: Environment is introduced by the following statement:
Enterprises should, within the framework of laws, regulations and administrative practices in the countries in which they operate, and in consideration of relevant international agreements, principles, objectives, and standards, take due account of the need to protect the environment, public health and safety, and generally to conduct their activities in a manner contributing to the wider goal of sustainable development.
It continues further with six implementation criteria

9. The United Nations Global Compact (1)
The UNGC was launched in 2000 by Kofi Annan, the then Secretary-General of the UN
It is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption
Companies have to report annually on the progress they have made and those which do not do it in two years, or whose reporting are deemed as insufficient, are considered inactive and excluded
However the UNGC is often criticized, especially by civil society, for its absence of legal constraints and control mechanisms for the engagements promised by companies

10. The United Nations Global Compact (2)
Principles (1)
Human rights
Principle 1: Businesses should support and respect the protection of
internationally proclaimed human rights; and
Principle 2: Make sure that they are not complicit in human rights abuses. 
Labor
Principle 3: Businesses should uphold the freedom of association and the
effective recognition of the right to collective bargaining
Principle 4: The elimination of all forms of forced and compulsory labor
Principle 5: The effective abolition of child labor; and
Principle 6: The elimination of discrimination in respect of
employment and occupation  

11. The United Nations Global Compact (3)
Principles (2)
Environment
Principle 7: Businesses should support a precautionary approach
to environmental challenges
Principle 8: Undertake initiatives to promote greater environmental responsibility
Principle 9: Encourage the development and diffusion of environmentally-friendly technologies
   
Anti-Corruption
Principle 10: Businesses should work against
corruption in all its forms, including
extortion and bribery

12. The Principles for Responsible Investment (PRI) (1)
The Responsible Investment Initiative is a UN-backed project which comprises of a network of investors which work together to implement the 6 PRI Principles
The Principles were devised by the investment community
They reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfil their fiduciary duty
The Principles provide a voluntary framework by which all investors can incorporate ESG issues into their decision-making and ownership practices and so better align their objectives with those of society at large

13. The Principles for Responsible Investment (PRI) (2)
The PRI start with the following statement:
“As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognize that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following: ... ”
The six principles are then listed and each is followed
by a description of actions that could be taken.

14. The Principles for Responsible Investment (PRI) (3)
We will incorporate ESG issues into investment analysis and decision-making processes.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosure on ESG issues by the entities in which we invest.
We will promote acceptance and implementation of the Principles within the investment industry.
We will work together to enhance our effectiveness in
implementing the Principles.
6) We will each report on our activities and progress
towards implementing the Principles.

15. The Equator Principles (1)
Project financing, a method of funding in which the lender looks primarily to the revenues generated by a single project both as the source of repayment and as security for the exposure, plays an important role in financing development all over the world
The Equator Principles (EPs) are a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing
Project financiers may encounter social and environmental issues that are both complex and challenging, particularly with respect to projects in the emerging markets
The EPs have generally been well received, but some project sponsors have said they go too far, while some NGOs say they do not go far enough.

16. 10 principles related to project financing:
The Equator Principles (2)
10 principles related to project financing:
Review and Categorisation
Social and Environmental Assessment
Applicable Social and Environmental Standards
Action Plan and Management System
Consultation and Disclosure
Grievance Mechanism
Independent Review
Covenants
Independent Monitoring and Reporting
EPFI (Equator Principles Financial Institutions) Reporting

17. Principles for Business (1)
The Caux Round Table
Principles for Business (1)
The Caux Round Table was founded in 1986 by Frederick Phillips, former President of Philips Electronics and Olivier Giscard d'Estaing, former Vice-Chairman of INSEAD, as a means of reducing escalating trade tensions
At the urging of Ryuzaburo Kaku, then Chairman
of Canon Inc., the CRT began focusing attention on
the importance of global corporate responsibility
in reducing social and economic threats to world
peace and stability.

18. Principles for Business (2)
The Caux Round Table
Principles for Business (2)
The CRT Principles for Business are the product of collaboration between executives from Europe, Japan, and the United States
They articulate a comprehensive set of ethical norms for businesses operating internationally or across multiple cultures
The CRT Principles for Business were formally launched in 1994, and presented at the United Nations World Summit on Social Development in 1995

19. The Global Sullivan Principles (1)
The Sullivan Principles (outlined by Rev. Leon Sullivan) were developed in 1977 to apply economic pressure on South Africa in protest of its system of apartheid
In 1999, more than 20 years after the adoption of the original Sullivan Principles and six years after the end of apartheid, the Rev. Leon Sullivan and United Nations Secretary General Kofi Annan together unveiled the new ‘Global Sullivan Principles’
The general objectives of the Global Sullivan Principles are to support economic, social and political justice by companies where they do business

20. The Global Sullivan Principles (2)
More specifically the objectives are:
To support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision-making committees and boards (e.g. boards of directors...)
To train and advance disadvantaged workers for technical, supervisory and management opportunities
To assist with greater tolerance and understanding
among peoples; thereby, helping to improve the
quality of life for communities, workers and
children with dignity and equality.

21. Questions
Who is responsible for the formulation and implementation of CSR declarations of principles?
What is the role of governments with regards to such international declarations of principles?
Do you think that CSR principles should be mandatory? Why/ Why not?
Which stakeholders should take part in the formulation of international CSR principles?

22. 2) Multi-stakeholder initiatives
Fair Labour Association (FLA)
Ethical Trading Initiative (ETI)
Global Reporting Initiative (GRI)

23. The Fair Labor Association (FLA)
The FLA is a non-profit organization established in 1999 by the Apparel Industry Partnership (AIP) to end sweatshop conditions in factories worldwide
In 1993 a ‘No Sweat’ campaign was launched by Robert Reich, as there were not enough inspectors in the US to enforce US labor laws
The FLA, by bringing together multiple stakeholders, calling for greater accountability and transparency from manufacturers, factories and other actors involved in global supply chains, is making steady progress toward fulfilling its mission: protecting workers’ rights and improving working conditions worldwide
With the active involvement of universities, civil society organizations and socially responsible corporations, the FLA has formed a unique and powerful alliance that is effecting positive change around the globe
Companies that join the FLA commit to establishing internal systems for monitoring workplace conditions, and publicly reporting on the conditions in their supplier factories

24. The Ethical Trading Initiative (ETI)
The ETI is a UK-based organization which was established in 1998 for sourcing companies to work in collaboration with NGOs and trade unions, in order to learn about the best ways to implement codes
Like most other initiatives, ETI has its own code, which is used as the basis for pilot projects and in the many working groups that ETI has established to look into various aspects of code implementation
The ETI Base Code is a code of labor practice, based on key conventions of the ILO, that ETI requires its members to uphold
The three categories of member organizations (sourcing companies, trade union organizations and NGOs) are equally represented on the ETI Board
Unlike other initiatives (e.g. FLA), the ETI has a significant number of member companies that market goods other than garments and shoes, such as food

25. The Global Reporting Initiative (GRI)
The GRI is a network-based organization that pioneered the world’s most widely used sustainability reporting framework
GRI’s core goals include the mainstreaming of disclosure on environmental, social and governance (ESG) performance
GRI's Reporting Framework is developed through a consensus-seeking, multi-stakeholder process
Participants are drawn from global business, civil society, labor, academic and professional institutions
Sustainability reports based on the GRI Framework can be used to demonstrate organizational commitment to sustainable development, to compare organizational performance over time, and to benchmark this performance against laws, norms, standards and voluntary initiatives

26. Questions
Are all types of multi-stakeholder initiatives useful for the development of CSR? Why / why not?
Are multi-stakeholder initiatives a better tool for CSR than other, not network-based devices (e.g. laws)?
Why / why not?
3. Are multi-stakeholder initiatives always successful? Please give examples
Which stakeholders normally take the lead in establishing multi-stakeholder initiatives?

27. Which examples can you think of?
3) Laws and regulations

28. 4) CSR standards Some of the standards include certification schemes
ISO (Global norms)
EMAS (EU norm)
AA 1000
SA 8000
OHSAS 18000
4) CSR standards

29. ISO Standards http://www.youtube.com/watch?v=uJLVSTQ9jww
The International Organization for Standardization (ISO) officially began operations in 1947, in Geneva, Switzerland “to facilitate the international coordination and unification of industrial standards”
Because the organization would have different acronyms in different languages (“IOS” in English, “OIN” in French), it was given a short name – ISO, derived from the Greek word isos (“equal”)
ISO developed over 18,500 international standards on a variety of subjects (e.g. quality, environment, safety) and 1,100 new ISO standards are published every year
ISO 9000 (quality) and ISO (environmental) are the most common standards and are implemented in 175 countries
ISO provides guidance on social responsibility for all types
of organizations, regardless of their size or location

30. ISO 26000 (1) Fields of application of ISO 26000
(also referred to as ISO 26000:2010)
Concepts, terms and definitions related to social responsibility
Background, trends and characteristics of social responsibility
Principles and practices relating to social responsibility
Core subjects and issues of social responsibility
Integrating, implementing and promoting socially responsible
behaviour throughout the organization and, through its policies
and practices, within its sphere of influence
Identifying and engaging with stakeholders
Communicating commitments, performance and
other information related to social responsibility

31. ISO 26000 (2) ISO 26000:2010 is intended to assist organizations in
contributing to sustainable development
It is intended to encourage companies to go beyond legal
compliance, recognizing that compliance with law is a fundamental
duty of any organization and an essential part of their social
responsibility
It is intended to promote common understanding in the field of
social responsibility, and to complement other instruments and
initiatives for social responsibility, not to replace them
In applying ISO 26000:2010, it is advisable that an organization
take into consideration societal, environmental, legal, cultural,
political and organizational diversity, as well as differences in
economic conditions, while being consistent with
international norms of behavior

32. Eco-Management and Audit Scheme
Eco-Management and Audit Scheme (EMAS) – launched by the European Commission in 1995 as a management tool for companies and other organizations in the industrial sector to evaluate, report and improve their environmental performance.
It was revised in 2001 to comprise all sectors including public and private services
EMAS adopted ISO as its required environmental management system
Participation is voluntary and extends to public or private organizations operating in the EU and the European Economic Area (Iceland, Norway)
To receive registration, organizations must adopt an environmental policy, conduct an environmental review, establish an effective environmental system, carry out an environmental audit and provide a statement of environmental performance

33. AA 1000
AA 1000 – ‘AA’ refers to “AccountAbility” and was established in 1999 by the Institute of Social and Ethical Accountability (ISEA)
It is promoted as a standard for the measuring and reporting of ethical behavior in business. It provides a framework that organizations can use to understand and improve their ethical performance, and a means for others to judge the validity of claims to be ethical
It aims to assist an organization in the definition of goals and targets, the measurement of progress made against these targets, the auditing and reporting of performance and in the establishment of feedback mechanisms
The involvement of stakeholder groups is crucial
to each stage of the process

34. SA 8000
A global social accountability standard for decent working conditions, developed and overseen by Social Accountability International (SAI).
SA 8000 is an auditable certification standard based on the UN Universal Declaration of Human Rights, Convention on the Rights of the Child and various International Labour Organization (ILO) conventions
SA 8000 covers numerous areas of accountability: Child Labour; Forced Labour; Health and Safety; Freedom of Association and Right to Collective Bargaining; Discrimination; Discipline; Working Hours; Compensation and Management Systems for Human Resources
The industrial sectors with the most certifications include apparel and textiles; building materials; agriculture, construction, chemicals, cosmetics, cleaning services and transportation
The countries with the most certification to SA 8000 include Brazil, India, China and Italy

35. Occupational Health and Safety Assessment Series
OHSAS 18001
Occupational Health and Safety Assessment Series
OHSAS is an international occupational health and safety
management system specification. It comprises two parts, and
18002 and embraces a number of other publications
It was created via a concerted effort from a number of the worlds leading national standards bodies, certification bodies, and specialist consultancies
It is intended to help an organization to control occupational health and safety risks
It was developed in response to widespread demand for a recognized standard against which to be certified and assessed
A main driver for this was to try to remove confusion in the
workplace from the proliferation of certifiable standards
(occupational health and safety specifications)

36. Questions Do you think that international CSR norms and
standards have a sustainable impact upon business?
Why / why not?
For a company, is it better to start with a specialized
standard, or to adopt directly a comprehensive one?
3. Some skeptics say that these CSR standards and norms are just another business as many of the organizations involved make a lot of money of the business community. What is your opinion?

37. 5) Eco-labeling schemes
EU Ecolabel
Max Havelaar
Forest Stewardship Council (FSC)
Marine Stewardship Council (MSC)
5) Eco-labeling schemes

38. Eco-Labeling
Eco-labels are market instruments designed to provide manufacturers with an incentive to produce environmentally friendly products and services, while giving consumers the ability to differentiate their purchases on the basis of environmental criteria
They are a form of sustainability measurement directed at consumers, intended to make it easy to take environmental concerns into account when shopping.
Some labels quantify pollution or energy consumption by way of index scores or units of measurement; others simply assert compliance with a set of practices or minimum requirements for sustainability or reduction of harm to the environment.

39. EU Ecolabel
It is a voluntary scheme which came into operation in 1992 and which was designed to encourage businesses, services and market products to show that they take environmental issues seriously
A product label seal that makes it easier for consumers to identify and choose green products which are less harmful to the environment than equivalent brands
For example, eco-labels will be awarded to products that do not contain CFCs which damage the ozone layer, to those products that are recycled, and to those that are energy efficient
The labels are awarded on criteria set by the EU and cover the whole life cycle of a product, from the extraction of raw materials, through manufacture, distribution, use and disposal of the product
The first products to carry the EU ecolabel were washing machines, paper towels, writing paper, light bulbs and hairsprays

40. Max Havelaar
The Max Havelaar Foundation awards a quality label to products that have been produced according to principles of fair trade
Through fair trade, it contributes to improve the living and working conditions of small farmers and agricultural workers in disadvantaged regions
The Max Havelaar Foundation is a member of the Fairtrade Labelling Organizations International (FLO) and complies with their international Fairtrade standards
Through guaranteed minimum prices and Fair-trade premiums, farmers in Africa, Latin America and Asia have the possibility to strengthen their villages and families through their own efforts
Fairtrade-certified farmers are paid a guaranteed minimum price for their products that provides them with a stable income

41. Forest Stewardship Council (FSC)
Established in 1993 as a response to concerns over global
deforestation, FSC fosters responsible forest exploitation
It is a multi-stakeholder organization, nationally represented in more than 50 countries worldwide
It applies the directive of its membership to develop forest management and a chain of custody standards, deliver trademark assurance and provide accreditation services to a global network of committed businesses, organizations and communities
FSC certification provides a link between responsible production and consumption of forest products, enabling consumers and businesses to make purchasing decisions that benefit people and the environment as well as providing business value

42. Marine Stewardship Council (MSC)
A fishery certification program and seafood ecolabel which
recognizes and rewards sustainable fishing
It is a global organization working with fisheries, seafood companies, scientists, conservation groups and the public to promote the best environmental choice in seafood
The mission of the MSC is to use their ecolabel and fishery certification program to contribute to the health of the world’s oceans by recognizing and rewarding sustainable fishing practices, influencing the choices people make when buying seafood, and working with their partners to transform the seafood market to a sustainable basis
Standards include sustainable fishing and seafood traceability which enables the tracking of that MSC-labeled seafood

43. 6) Extra-financial rating agencies
They evaluate companies based on various CSR criteria
VIGEO (France)
SAM (Switzerland)
EIRIS (United Kingdom)
OEKOM (Germany)
Innovest Strategic Value Advisors (USA)
6) Extra-financial rating agencies

44. VIGEO
French rating agency which combined with Ethibel (Belgium) in 2005 to become the first European rating agency
It is the leading European supplier of extra-financial analysis which measures companies' performance in the field of sustainable development and social responsibility and supplies (sells) this information to asset managers
The Vigeo Group is also specialized in social responsibility audits for companies and organizations
It manages the ASPI Sustainability Performance Index

45. SAM focused exclusively on Sustainability Investing
Sustainable Asset Management – SAM is an investment group
focused exclusively on Sustainability Investing
SAM offers asset management services, indexes and private equity
Its asset management capabilities include a range of single-theme, multi-theme and core sustainability investment strategies catering to institutional asset owners and financial intermediaries in Europe, the United States, Asia-Pacific and the Middle East
Based on its Corporate Sustainability Assessment, SAM has compiled one of the world's largest sustainability databases and analyzes over 1,000 listed companies annually
In cooperation with Dow Jones Indexes, SAM publishes and licenses the Dow Jones Sustainability World Indexes (DJSI), a series of global sustainability benchmarks launched in September 1999

46. EIRIS
Ethical Investment Research Services – a research organization set up in 1983 with a group of churches and charities to help them put their ethical principles into practice when making investment decisions
Promotes the concept of ethical or socially responsible investment
According to their own statement EIRIS is the leading independent provider of research for social, environmental and ethical performance of companies worldwide in the field of ethically oriented investments
Assumed to be market leader in the UK with over 60% of UK ethical funds managed by their clients
Offers an independent research which covers almost 2,800 companies all over the world
In 2005 EIRIS launched a new service called ‘Convention Watch’ to assess alleged company violations of labor, human rights, bribery and corruption, military and environmental standards and principles

47. OEKOM
OEKOM Research – one of the world's leading rating agencies in the segment of sustainable investments
Develops innovative investment strategies that combine sustainability research with a high rate of return
Sustainability research covers share and bond issuers (companies, countries and supra-national institutions)
The organization stresses that they place a strong emphasis on
quality, independence and transparency
Since 1993, OEKOM Research has actively helped to shape the market for sustainable investments
Evaluations provide companies with a critical yardstick, while at the same time acting as a stimulus for integrating environmental and social concerns into company management

48. An important provider of extra financial and sustainability
Innovest Strategic Value Advisors
An important provider of extra financial and sustainability
based investment research founded in 1995 in New York
Covers more than 2,000 international companies
Innovest's Intangible Value Assessment (IVA) ratings analyze relative corporate performance on intangible value drivers related to the strength and sustainability of companies' competitive advantage
Innovest’s Strategic Engagement and Advisory Service (ISEAS) enables investors to both enter into dialogue and ‘engage’ companies on areas to improve their governance and sustainability performance while maintaining the investors’ existing portfolio construction and asset manager selection
Ratings range from AAA (best) to CCC (worst)

49. Questions
What are the reasons for the rapid development of extra-financial rating agencies? Is it the sign that a shift is taking place or just another ‘fashion’?
Why do some consider CSR assessment tools and methodologies as just another business whim?
Which type(s) of CSR tool(s), in your opinion, are
more efficient than others? Why?
What do you think of eco-labels?

50. To be developed in Session VI 7) Sustainability stock market indices
DJSI (Dow Jones)
FTSE4GOOD (“Footsie for Good”)
ASPI Eurozone
To be developed in Session VI
7) Sustainability stock market indices

51. Specialized networks, resource centers, newsletters, consulting firms…
Which examples can you think of?
Is this industry really “ethical”?
Specialized networks, resource centers, newsletters, consulting firms…
(The “CSR industry”)