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2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski 1 Djordjija Petkoski, Head of Business, Competitiveness.

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Presentation on theme: "2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski 1 Djordjija Petkoski, Head of Business, Competitiveness."— Presentation transcript:

1 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 1 Djordjija Petkoski, Head of Business, Competitiveness & Development; World Bank Institute World Bank Institute & GAIN Business Alliance Corporate Social Responsibility and Sustainable Competitiveness Dr. Djordjija Petkoski Head of the Business, Competitiveness & Development Program World Bank Institute, The World Bank Group Alexandria, Egypt - October 29, 2008

2 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 2 Background and Context

3 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 3 Our world is … … out of balance.

4 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 4 Today across the world: 1.3 billion people live on less than one dollar a day; 3 billion live on under two dollars a day; 1.3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to electricity. Challenges or opportunities? Challenge: Source: The World Bank Group

5 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 5 Is This Our World? Amount needed to put every child into school by 2000 = US $950 billion. It did not happen. This amount was less than 1% of what the world spent every year on weapons.

6 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 6 Is This Our World? 20% of the population in developed nations consumes 86% of the worlds goods. The poorest 20% of the worlds population consumes only 1.3%.

7 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 7 Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs). The top 200 corporations combined sales are 18 times the size of the combined income of 24% of the total world population. MNCs account for a quarter of global economic activity, they employ less than 1% of the worlds labor force, while one third of the worlds willing-to-work population is unemployed.

8 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 8 Developing countries outperform high-income countries Developing countries High-income countries Real GDP, percentage change Forecast Source: Development Prospects, The World Bank Group

9 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 9 Developing countries outperform high-income countries Developing countries Real GDP, percentage change Forecast Excluding India and China Source: Development Prospects, The World Bank Group

10 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 10 Emerging of MNCs in developing countries Galanz 134 major companies in ten developing countries: Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Poland, South Africa and Turkey

11 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 11 Announced value of Western-targeted acquisitions by emerging-market acquirers, (Wall Street Journal, Feb 2006) Buying Spree

12 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 12 The Role of the Private Sector

13 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 13 $113 bn$7 bn$106 bn75% Stock Market Value Net Book Value Goodwill% $380 bn$41 bn$339 bn89% $199 bn$21 bn$178 bn90% $499 bn$23 bn$476 bn95% $104 bn $8 bn$96 bn92% $202 bn$31 bn$171 bn85% $60 bn$8 bn$52 bn87% $46 bn$19 bn$27 bn59% $35 bn$8 bn$28 bn78% $149 bn $72 bn $77 bn52% Source: Interbrand/Citibank league table, 2001 Evidence of the Importance of Goodwill Corporate Responsibility & Risk Management, SustainAbility, 2005

14 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 14 New Pressures Pressure on business to engage in broader sustainability issues. Increasing difficulty of tackling certain global problems unilaterally. Necessity of bringing in the comparative advantages of all stakeholders. Competitive benefits for the private sector to play a more proactive and collaborative role in development. New Paradigms

15 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 15 The Role of the Private Sector Economic, environmental and social issues are becoming too complex and the resources and competencies needed to address them too dispersed for one sector to have all the solutions. There is a growing expectation that the private sector can and will play a role in helping to address these challenges. The critical issue for all stakeholders is to define appropriate and realistic boundaries. Common interests and values.

16 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 16 Businesses must go beyond the "compliance game" and public relations. Businesses must define the boundaries of their social and environmental impact. Businesses must prioritize demands for CSR and philanthropic giving. Businesses must deal with "activist organizations" and making them part of the solution. Challenges to Businesses

17 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 17 What Do Executives Think? 84% of executives agree that making broader contributions to the public good should accompany generating high returns to investors. - McKinsey Global Survey – Assessing the Impact of Societal Issues, 2007.

18 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 18 What Do Executives Think? Most important ways in which large corporations currently contribute to the public good: Creating jobs65% Making discoveries, innovations, scientific and technological breakthroughs 43% Producing products, services that people need 41% Supporting their local economy (e.g. tax revenue) 35% Training, educating employees23% Providing dividends, gains for stockholders 23% Supporting, preserving the environment 16% Engaging in philanthropy (e.g. donating money, services or products) 15% Contributing to local communities 13% Contributing to employee benefits such as pensions 12% McKinsey Global Survey – Assessing the Impact of Societal Issues, 2007.

19 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 19 Reactive Proactive Businesses must move from reactive behavior to strategic measures. Businesses must create new strategic opportunities, including multi-stakeholder engagement. Businesses must make improvements in the competitive context - a healthy society is a prerequisite to economic success.

20 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 20 CSR is the commitment of business to managing & improving the economic, environmental & social implications of its activities at the firm, local, regional & global levels. CSR can be used as a framework through which business engages in multi-stakeholder partnerships for sustainable development. Corporate Social Responsibility

21 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 21 Corporate Philanthropy vs. CSR CSR does NOT have to be a philanthropic activity. Philanthropy can be complementary to CSR. Philanthropy is external to a business. CSR is both internal and external to a business. CSR should be a part of a businesss core strategy –This way, there can be a fundamental, long-term impact on poverty alleviation and social development by increasing national competitiveness.

22 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 22 enhanced competitiveness and investment. Poverty Reduction Collateral Social benefits Stabilization of fragile,developing and emerging market countries Better business Environment

23 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 23 Corporate Social Responsibility And the Base of the Pyramid

24 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 24 Base of the Pyramid Approach Despite global companies ability to create wealth worldwide, the benefits of this rarely directly reach the 4 billion poorest people of the world – the so-called Base of the Pyramid (BOP).

25 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 25 Population Distribution (by Age) and Population Growth

26 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 26 Estimated BOP market by sector: $5 trillion

27 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 27 BOP Approaches and CSR BOP approaches can be a critical component of a companys CSR strategy and core business. –New business models The more traditional consumer-oriented BOP approaches Empowering the poor to not only enter the market as consumers, but to be integral parts of the supply chain as producers. –Creation of new markets AND the transformation of existing markets.

28 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 28 Platform for Business Growth –Increased access to financial services and to communications, notably mobile telephones is the greatest success story. –Access to information, e.g. up to date market prices, and to credit is now enabling the poor to compete more effectively, and engage as entrepreneurs in the global economy.

29 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 29 Integrating CSR and BOP Both CSR and BOP strategies should be fully aligned with broader corporate strategy and long-term market positioning. Effective CSR and BOP strategies can help deliver sustainable business growth.

30 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 30 Emerging Business Case for BOP Approaches Top-line Growth –Most large businesses have saturated their markets entering untapped markets opens up an enormous new consumer, supplier, and partner base and unlimited opportunities for innovation and investment. Cost Savings –Bringing in the BOP creates supply chain efficiencies –Outsourcing labor markets to the BOP –BOP markets are built on different business models Innovation –Extending beyond innovation in new products to innovation in new business models.

31 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 31 Some Main CSR-related Issues in the Arab World

32 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 32 Areas Where Businesses Can Play a Significant Role –Business Engagement with Youth Youth unemployment is a growing problem in the region. There is a large gap between the skills that people have and job requirements. Investing in young people will pay off as a more skilled labor force is created. Engagement of youth can also have a multiplier effect – increased entrepreneurship, wealth creation, increased innovation, higher education levels, reduced fertility rates. Our program is very committed to engaging youth and future leaders. –Videoconference on CSR in the Arab World.

33 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 33 Areas, cont. –SMEs and Family-Owned Enterprises (FOEs) SMEs and FOEs are very prominent in the region and their success, development and expansion is critical to the regions economic competitiveness, growth, and wealth creation. Finding ways to reach this demographic in regards to CSR is important. –Supply chains and Clusters. - Public-Private Partnerships Engaging with the government is critical for creating incentives, enforcement, setting national priorities, and comparative advantage.

34 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 34 Areas, cont. Transparency and accountability

35 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 35 Corruption as a Key Constraint to the Private Sector, by Region

36 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 36 Learning and Experience- Sharing

37 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 37 WBIs CSR Program Online course on interactive e-learning platform Face-to-face workshops –For localized training and relevance to the clients socio-political, cultural and sectoral context. Case studies –For relevant experience-sharing and learning. –To document progress and success stories.

38 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 38 Objectives: To provide participants with an introduction to the fundamental rationale, design and implementation of CSR programs. The course can be used to establish or strengthen CSR policies and practices by focusing on sustainable competitiveness and good governance. Focuses on: Key elements of the policy and business environment that support CSR and how these elements function as an integrated system Providing a strong justification on why CSR should be incorporated in corporate business strategy and country development strategy Facilitating access to relevant research and data and dissemination of best practices. CSR Program

39 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 39 CSR Online Course Over 30,000 participants in over 90 countries around the world. The course is now available also in Arabic. Course Modules: 1.CSR Main Concepts 2. Decision-Making Frameworks 3. CSR Diamond 4. Building Sustainable Competitiveness through CSR 5. CSR and the Poor 6. An Introduction to Coalition: Building Action Plans Target Audience: Primarily business, but also very useful for government, NGOs, academia, and university students.

40 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 40 CSR Program The WBI CSR program in Egypt will be offered jointly with InWent Capacity Building International, Germany

41 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 41 Executive Development Program

42 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 42 Approach The World Bank Institutes Executive Development Programs utilize a holistic approach to the learning experience. Preparation In order to tailor the program to your needs and to encourage learning before the beginning of the Training component, participants are challenged to clearly define what they hope to learn during the program, and commit to how they plan to leverage on that learning after the program. Participants will be given key materials and resources to prepare for the training. Defining the Learning Experience Preparation Learning by experiencing Training Applying what you have learned Consolidation

43 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 43 Training Training is divided into thematic modules consisting of a combination of the following session types: Panel discussions Case study Simulation exercises Interactive multimedia sessions Face-to-face component

44 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 44 Partners World Bank Group InWEnt Capacity Building International, Germany Transparency International The Wharton School of Business, University of Pennsylvania Harvard University The Global Alliance for Improved Nutrition The Center for International Private Enterprise

45 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 45 Upcoming EDPs At World Bank Headquarters, Washington, D.C 1. Inclusive Agri-Business February 16-20, 2009 2. Business-led Anti-Corruption Strategies April 6-10, 2009 3. Opening Markets with the Poor June 8-12, 2009 (Regional Program) 4. Africa Dates to be determined

46 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 46 CSR and BOP case studies

47 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 47

48 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 48 Takamol Integrated Reproductive Health Services Project

49 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 49 Takamol is a five year project to promote an integrated model for strengthening maternal/child heath, family planning and reproductive health in Egypt. Through the USAID funding, Takamol is the result of a social responsibility partnership between the private and public sector in Egypt. The objective is to encourage the private sector involvement in Takamols integrated model and thereby encourage the effort of the Ministry of Health and Population (MOHP), to achieve sustainable reduced fertility and improved health outcomes of mothers and newborns. It targets 200 villages and more than 25 hospitals in the neediest areas of 11 Upper and Lower Egypt governorates.

50 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 50 Focus on Mobilizing religious leaders as advocates for reproductive health Empowering woman to improve their reproductive health Bringing a positive behavior change Reactivating clinic management boards Reactivating clinic service improvement funds Maximising ideas and resources to create sustainable community assets Closing the gap between poverty and poor health

51 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 51 Some Achievements: Barclays Bank Egypt: Renovated a clinic in a poor urban area of Cairo P&G Egypt: Delivering generic hygiene messages to women in hard to reach areas. PriceWaterhouseCoopers: Donated funds to purchase income-generating equipment for womens cloubs in clinics renovated under the Takamol project. Mentor Graphics: Provided funding to furnish womens clubs in 3 renovated clinics. RWE Dea: The German petroleum company covered the renovation costs of 2 classrooms under a joint initiative between Takamol and Egypts National Council for Childhood and Motherhood. Multipharma and Future Pharma: These local Egyptian companies provided free of charge doms and medicines.

52 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 52 Challenges: Lack of shared vision between the private and public sector No real sustainability mechanisms to maintain the momentum for collaboration To meet these challenge, the Egyptian Finance Executive Foundation (EFEF) played an intermediary role between the Ministry of Health and Poulation (MOHP) and the private sector.

53 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 53 Good and Services Nutrition Healthcare Clean water Public health Housing Financial services Education Skills Hunger/Food Water Security, Shelter Hygiene Public Health Jobs Empowerment Source: HBS Alumni Club Malaysia. Professor V. Kasturi Rangan $20,000/annum $2,000/annum $725/annum $365/annum BOPBOP The BOP market : Takamol

54 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 54 Scale Scaled up global and Egyptian best practices to ensure that high quality integrated services are available at the community level Collective Action MOHP USAID Private Sector NGO (EFEF) Sustainability $1.4 MM has been leveraged by businesses and individuals Success Formula

55 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 55 Measuring impact: Businesses More than $1.4 million has been leveraged by companies and business organizations and individuals through partnerships with Takamol to support health initiatives in Egypt. Behavioral Change: Increased number of multi stakeholder partnerships in rural areas. Clinics are adopting a business mentality to look at other ways to meet community needs and generate income for the health facilities. Clinics

56 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 56 What questions are important to you 1. How would measure the impact of the project? Private sector engagement? 2. Improved maternal and childrens health? 3. Better access to health services? All of the them? 4. Do you agree that the skills and knowledge of clinic and hospital staff been upgraded? 5. How would you scale up this project? 6. Any other recommendation?

57 2008 The World Bank Group, All Rights Reserved. Legal. Dr. Djordjija Petkoski dpetkoski@worldbank.org 57 Thank You ! Djordjija Petkoski, dpetkoski@worldbank.org Program Leader Business, Competitiveness & Development World Bank Institute www.developmentandbusiness.org


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