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CSR Mechanism for Value CreationCSR Mechanism for Value Creation

Assistant Professor Suthisak Kraisornsuthasinee, PhDAssistant Professor Suthisak Kraisornsuthasinee, PhDFaculty of Commerce and AccountancyFaculty of Commerce and Accountancy

Thammasat UniversityThammasat University

หัวขอการสัมมนาGlobal Response to CSR Benefits from CSRMeaning of CSR CSR Initiatives and ScreensBasic SRI Strategies

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Key Challenge for SRI in Thailand

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Global Corporate Response to CSRPriority

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The Economist Survey 2007

Global Corporate Response to CSRPerception

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The Economist Survey 2007

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Benefits from CSR to Business OrganizationsPotential Benefits from CSR

Better anticipation and management of an ever-expanding p g p gspectrum of risk.Improved reputation management.Enhanced ability to recruit, developed and retain staff.I i i i i d k Improve innovation, competitiveness and market positioning.Enhanced operational efficiencies and cost savings.

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IISD, 2007

Benefits from CSR to Business OrganizationsPotential Benefits from CSR (cont.)

Improved ability to attract and build effective and p yefficient supply chain relationships. More robust “social license” to operate in the community.Access to capital.I d l i i h lImproved relations with regulators.A catalyst for responsible consumption.

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IISD, 2007

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Response from International OrganizationsUN Principles of Responsible Investment (UNPRI)

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OECD, 2007

Defining CSR

Corporate Social Responsibility...???

Corporate Corporate Citizenship?

Social Responsibility?

Donation?

Public Relations?

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Corporate Philanthropy?

Corporate Citizenship?Corporate Responsibility?

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Defining CSR

Corporate Social Responsibility“The continuing commitment by business to behave The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community

d ”

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and society.”

The World Business Council for Sustainable Development

Defining CSRSocial Responsibility“Responsibility of an organization for the impacts of its decisions and

ISO 26000 Committee Draft (12-12-2008)All information is subject to change

activities on society and the environment, through transparent and ethical behavior that• contributes to sustainable development, health and the welfare of

society• takes into account the expectations of stakeholders• is in compliance with applicable law and consistent with

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international norms of behavior; and• is integrated throughout the organization and practiced in its

relationships.” Note 1: Activities include products, services and processes

Note 2: Relationships refer to an organization’s activities within its sphere of influence

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CSRSimple relation between value chain and supply chain

Natural, Social andEconomic Environment

StakeholderStakeholder Stakeholder

Value chain

StakeholderC

Customers

StakeholderB

StakeholderD

StakeholderA

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OrganizationDistributersSuppliersSub

suppliers

Raw materialproviders Waste

services

Consumers

Adapted from ISO 26000 CD

CSR Core SubjectsThe 7 Core Subjectsin ISO 26000

H i ht *Community

i l t &

Holisticapproach

Human rights*

LaborPractices*

Theenvironment*

involvement &Development

Organization

Organizational

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ConsumerIssues*

Fair operatingPractices*

Governance*

Inter-dependence

ISO 26000 Committee Draft (12-12-2008)All information is subject to change

*Consistent with major areas in the OECD Guidelines for MNEs

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Core Subjects of ISO 26000Organizational Governance - Decision making process and structureHuman Rights

1. Due diligence2. Human rights risk situations3. Avoidance of complicity4. Resolving grievance5 Discrimination and vulnerable groups5. Discrimination and vulnerable groups6. Civil and political rights7. Economics, social and cultural rights8. Fundamental rights at work

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Core Subjects of ISO 26000Labor Practices

1. Employment and employment relationships2. Conditions of work and social protection3. Social dialogue4. Health and safety at work5. Human development and training in the workplace

The Environment1. Prevention of pollution2. Sustainable resource use3. Climate change mitigation and adaption4. Protection and restoration of the natural environment

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Core Subjects of ISO 26000Fair Operating Practices

1. Anti-corruption2. Responsible political involvement3. Fair competition4. Promoting social responsibility in the sphere of

influence5. Respect of property rights

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Core Subjects of ISO 26000Consumer Issues

1. Fair marketing, information and contractual practices2. Promoting consumers’ health and safety3. Sustainable consumption4. Consumer service, support, and dispute resolution5. Consumer data protection and privacy6. Access to essential services7. Education and awareness

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Core Subjects of ISO 26000Community Involvement and Development

1. Community involvement2. Education and culture3. Employment creation and skills development4. Technology development5. Wealth and income creation6. Health7. Social investment

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Voluntary Initiatives & Tools for CSR

ORGANIZATION

CORE SUBJECTS OF ISO 26000

rganizational

governance

uman

 rights

bor p

ractices

nviro

nmen

t

air o

peratin

g 

nsum

er issues

Commun

ity 

olvemen

t and

 evelop

men

t

Or g H La E F a

Con C

invo de

Section 1: Intergovernmental InitiativesUN Global Compact X X X X

OECD  X X X X X X X

Section 2: Multi‐stakeholder InitiativesAccountability X X X X X X X

EFQM X X X X X X X

Global Reporting Initiative (GRI)X X X X X X X

Social Accountability International X X X X

Example ofCross-sectoralInitiatives

Transparency InternationalX X

Section 3: Single Stakeholder InitiativesCaux Round Table X X X X X X

Consumers International X X X

ICC X X X X X X X

WBCSD X X X X X X X

Section 4: SR Indexes

DJSI X X X X X X X

KLD X X X X X X X18

Sources:Adapted fromISO 26000 CD;DJSI;OECDKLD

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Voluntary Initiatives & Tools for CSR

CORE SUBJECTS OF ISO 26000

ORGANIZATION

CORE SUBJECTS OF ISO 26000

Organizational

governance

Hum

an rights

Labo

r practices

Environm

ent

Fair ope

ratin

g 

Consum

er issues

Commun

ity 

involvem

ent a

nd 

developm

ent

Sector: Finance/InvestmentGuideline for ESG Reporting & 

Integration into financial analysis

X X X x X X X

Example ofSectoralInitiatives

Principles for Responsible Investment (UN PRI)

X (X) (X) X (X) (X) X

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Sources:Adapted fromISO 26000 CD

SR Screen CORE SUBJECTS OF ISO 26000

onal

nce

ghts

ctices

men

t

practices

issues

vemen

t and

 men

tExample ofScreens

Organizati

governan

Hum

an rig

Labo

r prac

Environm

Fair ope

ratin

g 

Consum

er i

Commun

ity involv

developm

Sector: Finance/ InvestmentGeczy et al(2005) +/‐

‐+/‐

++/‐‐

+/‐ +/‐+

SR Screens

Sources:

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Sources: ISO 26000CD (2008); L. Renneboog et al (2005); OECD (2007)

Other Negative Screens: AlcoholGambling

Nuclear PowerFirearms

Irresponsible Foreign OperationsAbortion/Birth Control

Usury

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SR Screens

DJSI Exclusionary screens KLD Exclusionary ScreensAlcoholGamblingTobaccoArmaments & Firearms

AlcoholGamblingTobaccoMilitary Contracting

Adult Entertainment Nuclear PowerFire Arms

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Basic SRI StrategiesSocially Responsible Investment Strategies

FinancialInstitutions

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CSR Firms

OECD, 2007

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Basic SRI StrategiesSocially Responsible Investment Strategies (cont.)

SRI Technique

Screening Engagement

Partial scope(a sub‐set of the entire 

portfolio)

Investing in an ethical SRI mutual fund

Investing in an advocacy‐based SRI 

mutual fundIntegration

(Complete portfolio)Applying screens to every investment

Engaging with each company whenever 

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concern arises

OECD, 2007

Challenges for SRI in ThailandKey Concerns for SRI in Thailand

Economic and socio-political conditionAccess to dataSelection criteriaSize of the IndexResponse from investors

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Q & A

Thank you for your attention.

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Suthisak Kraisornsuthasinee, PhDAssistant ProfessorFaculty of Commerce & AccountancyThammasat University