Public Sector Perspective on CSR and Responsibility Who is Responsible for Responsibility? Santiago, Chile September 2005

2 Public sectors defined National, state and local governments Multilateral development institutions Discuss both to highlight ways in which the two can work together to facilitate CSR

3 Role and responsibility of government Provide a suite of services to its citizens including basic infrastructure, security and protective services, basic health, educational services, etc. Ensures that adequate conditions exist for the private sector to function and thrive Lead and negotiate trade treaties and relations with other nations

4 Responsibility of government and CSR Government is responsible for a variety of factors –Improve the business climate –Promote transparency and accountability among public sector agencies –Promote public policies that reinforce sound business practices –Engage the private sector in development

5 Improving the business climate Government has key role to play to foster an environment conducive to private sector growth Efficient and open markets are essential Fostering proper incentives can facilitate CSR adoption in the private sector Business climate actions –Simplify and streamline the process for registering a new company –Reforms to legal and regulatory framework related to private sector operations –Establish minimum standards to ensure level playing field

6 Promote transparency and accountability Governments can take important steps to promote transparency in its own operations and actions Minimize opportunities for corruption Ensure better use of scarce financial resources Utilize external monitoring in public bidding processes

7 Promote public policies Only public sector can set the overall policy and regulatory framework within which businesses operate Some governments are beginning to view CSR as a cost- effective means to enhance sustainable development strategies Actively promote public policy interventions that enable sound labor and environmental conditions in the country Link CSR to competitiveness strategies to attract investment and position exports Challenge is to identify the appropriate priorities and incentives that can strengthen local initiatives

8 Engage the private sector Harness business enthusiasm for CSR to help reduce poverty Identify suitable initiatives where public and private interests are aligned Leverage resources and complementary skills to resolve specific problems or issues Be careful not to impose responsibilities of the public sector onto the private sector

9 Multilateral development institutions (MDIs) and CSR Governments face increasing social demands Business face pressures to be more competitive The two parts create an opportunity – good for business and contributes to the well-being of society CSR is development

10 Comparative advantages of MDIs Ability to convene Relationships with all parties in the “CSR market” (public sector, private sector, civil society) Capacity to work on failures or impediments in the market Share common interest with the public and private sector in terms of development

11 Role of IDB for private sector development Improve and strengthen the business climate in the region –Business Climate Initiative (BCI) –Efforts to streamline procedures and improve the functioning of the private sector –Financial support to a variety of projects Promote transparency among governments Assistance in defining appropriate public policies Engage the private sector in CSR

12 MIF and Private Sector Development One of the critical mandates of the MIF is to promote the development and growth of small, entrepreneurial enterprises. Economic volatility, lack of access to capital, and an increasingly competitive environment have traditionally hampered the region’s businesses. Small businesses are even more vulnerable as their ability to weather change is restricted by scarce managerial and financial resources.

13 Role of the IDB in fostering CSR Strengthening of the drivers, through efforts of improving the business climate and public policies CSR is part of IDB’s private sector development strategy to promote responsible behavior among the private sector As outlined by our central department (SDS), the role of multilaterals in promoting CSR includes: –Promotion/Advocacy –Conducive policy environment –Financial support –Compliance, reporting and accountability

14 IDB actions to foster CSR Organize conferences and other events Publications and research (SMEs and the region) Interest in adopting Environmentally and Socially Responsible Procurement practices Interest in developing a strong CSR communication strategy Use of covenants in contracts Financial support to projects

15 Use of covenants Private Sector Department (PRI) activities: –General Environmental and Social Guideline which outlines the basic requirements for PRI projects (CSR conditionality in projects) –As an additional measure to assist borrowers, PRI has prepared a guideline stating how they might do projects with local communities.

16 Project level support to CSR MIF is interested in CSR as a tool for competitiveness for companies, especially among small and medium enterprises (SMEs) Launched CSR Cluster in March 2004 Objective of projects – Expand the use of CSR measures, especially among SMEs Objective of CSR –Tool for improving competitiveness and new development models that include the private sector

17 Opportunities Shift mindset from responsibilities to looking for opportunities Benefits for public and private sectors, civil society organizations and society as a whole

18 For More Information For information about the IDB and CSR, visit the IDB’s CSR website at For information about MIF’s activities, visit our website at