Corporate Social responsibility (CSR) Contact Ministry of Foreign Affairs of Denmark, The Trade Council or one of our CSR advisers in Denmark, China or India: The Trade Council: Tel. +45-33 92 00 96 Copenhagen: Carl Christian Hasselbalch, Business Development carhas@um.dk /Phone +45 50 87 66 55 Beijing: Søren Albertsen, Head of CSR, China soralbm@um.dk /Phone +91 (11) 4209 0700 New Delhi: Bhawna Argawal, Head of CSR, India bhaaga@um.dk/phone +86 (10) 8532 9900
Preface For most Danish companies a considerate human resources policy, a decent working environment, contributing to environmental protection and maintaining business integrity are part and parcel of sound management when you do business in Denmark. Moreover these values are supported and indeed required by Danish laws, e.g. on environmental protection and health and safety in the workplace. Corporate Social Responsibility is an everyday phenomenon in Denmark itself. But with globalization, a company s business activities today very often cover several continents. As an example, a Danish company may have a joint venture or a subsidiary in China and have suppliers both there and in the neighboring countries. It may sell its finished products in China, in other countries in Asia as well as in Europe and the US. From the point of view of CSR, the consequences are evident: When the business goes global, so does its social responsibility. Recognizing the growing importance of CSR as a competitive parameter, the Trade Council of the Ministry of Foreign Affairs has decided to include this area in its business services to Danish companies in the most important emerging markets. We see CSR as a field in which we can contribute to the overall business strategy that Danish companies lay out for themselves in these markets and we have chosen a bottom-up, demand-driven approach for our advisory services. Last Spring the Embassies in Beijing and New Delhi were reinforced with experienced CSR advisers, and they have embarked on the first exciting assignments for Danish companies. In 2011 we are expecting to expand our CSR services to other interesting emerging markets as well as those more traditional export markets in which CSR plays an increasing role for the business strategies that Danish companies adopt. This booklet is our introduction to CSR and to the services that we offer. We hope you will enjoy the read! Ministry of Foreign Affairs, The Trade Council, January 2011 1
What is CSR? Corporate Social Responsibility (CSR) is the responsibility of a company for the impact of its decisions and activities on society and the environment. Business driven CSR is when a company links its CSR activities directly with its long term efforts to secure a profitable business. A business takes social responsibility when it: works to improve conditions for employees and occupational health and safety works systematically with environmental and climate management develops new products or services which include a social or environmental dimension works with honesty and integrity in business transactions engages in local community development, takes into account expectations of stakeholders works together with its suppliers to improve social and environmental conditions CSR is closely associated with stakeholder engagement. It is all about the way the company interacts with its employees, various business partners, customers, investors and other interest groups, helping its own business while contributing to society. EMPLOYEES INVESTORS CUSTOMERS COMPETITORS COMPANY NGOS MEDIA COMMUNITY GOVERNMENT Stakeholders 2
The assistance of the Embassy has been of decisive value for us. The Embassy has helped us finalize the framework of an ambitious CSR project we are undertaking which we expect to replicate elsewhere to maximize its social as well as its business impact. The CSR expertise of the Embassy has been especially valuable for us in setting the baseline and assessing the impact of the project. Ajit Inamdar, Chief Financial Officer, Cheminova India Ltd. Benefits at a Glance Risk mitigation CSR is becoming an ever more important element in company risk management. A serious and comprehensive approach to CSR can mitigate reputational risks, risk of high staff turnover, high number of sick days, low quality of products and conflicts with local governments or other interest groups. Productivity gains and lower costs CSR initiatives can increase productivity and lower costs. Environmental management systems can lower production costs by reducing energy consumption and optimize business processes. Investment in health and safety programs for workers can reduce accident rates, health care costs and the number of lost work days. Supplier reliability Today it is not only the end-customers that are expecting companies to engage in corporate social responsibility. The demands have been pushed further down the value chain. Business customers are requiring suppliers to comply with their code of conducts. Ethical supply chain management can result in closer and more binding partnerships with suppliers which create added value for everyone involved. Improved competitiveness CSR can be a strategic tool to enhance a company s competitiveness, to innovate and move ahead of competitors. Through successful CSR, the company can strengthen its overall management and enhance its brand. Customer loyalty and satisfaction CSR initiatives can increase customer loyalty and satisfaction and thereby boost sales, resulting in a stronger market position. Employer Branding CSR initiatives can also boost employees pride in a company, and thereby increase staff motivation and work productivity. Today, CSR is an important recruitment parameter. Showing corporate responsibility makes it easier to retain and attract the most talented employees. Innovation Focus on CSR can foster development of new business models and products, e.g. eco-labels, new product specifications and products for new market segments. 3
Services from The Trade Council The Trade Council offers advisory services on how to work with CSR.. on your export markets and cover the whole spectrum from strategy and policy making, ethical supply chain management to stakeholder engagement and political-social analysis. We deal with compliance to national law and international standards as well as voluntary contributions. In China and India, we have experienced CSR advisors who are able to assist you throughout your work with CSR, from the initial overview of the challenges you and your business partners are facing, to the identification and development of value propositions for the partnership. New emerging markets are currently being identified to follow China and India as the Trade Council s key service markets in CSR. In other more traditional export markets, selected export advisors provide a basic advisory package. They are able to help you design local CSR strategies and to conduct political and social risk analysis. As the figure below illustrates, the Trade Council offers five types of CSR services. On the following pages you can read examples on how we are able to assist you within each area.. Ethical Supply Chain Management Stakeholder Engagement CSR Strategy CSR in the Organisation Political-Social Analysis 4
Maersk invited the Danish Embassy to assess the CSR improvement process made by Maersk Dongguan (MCID) since 2008 and based on the assessment give a presentation about the connection between the CSR improvement process, MCID strategy, Maersk values, Danish values as well as cultural differences. By use of films, speeches, presentations, group exercises and role play, the activity succeeded with active participation of our foremen and an efficient communication of values and interrelations. The activity has highly supported our company in communicating our values. Morten Hostrup, Head of Human Resources and Administration, Maersk Container Industry Dongguan Ltd. CSR Strategy Types of services: Assistance on aligning CSR strategy with corporate strategy Assistance on integrating CSR in business development and innovation Case 1: Market penetration and reputation enhancement To enhance reputation with customers at the Base of the Pyramid in order to expand market share in the low income markets. Assess company s business strategy in regard to proposed new CSR strategy and design a pilot project for the company in selected villages to test and develop the new strategy. A pilot project that can be brought to scale and strengthen the company s brand. In addition it can increase outreach and strengthen sales. Case 2: Strategy formulation To strengthen CSR activities globally. Help company identify challenges and opportunities and assist in devising a strategy for how to work with CSR on specific export markets. A plan of action for how to work with CSR on specific export markets. 5
CSR in the Organisation Types of services: Support to policy making, strategy development and training regarding Human resources Labour practices Health and safety Environment Anti-corruption Case 1: Anti-corruption To assess the risks of corruption with likely business partners (e.g. commercial bribery) and public authorities (e.g. extortion) when entering the market for the first time. Undertake a corruption risk assessment for the company in regard to likely business partners and public authorities and /or provide training for staff and management at all levels. A risk analysis will be accompanied by recommendations for action. The company will have a strong tool to handle corruption both on the political and practical level. Case 2: Human resources To keep down staff turnover and increase employees job satisfaction as well as pride in company. Identify CSR initiatives which will strengthen the company s human resource management. Propose an action plan. Lower staff turnover and higher job satisfaction for employees leading to higher productivity. 6
The Trade Council provided TOP-TOY with an industry report regarding CSR related risks in China. This was a very efficient way for TOP-TOY to get an overview of the challenges and TOP-TOY utilised the valuable information as a solid and valuable contribution to current and future CSR activities in China. Veronique Brigitte Bagge, Group Sustainability Manager, TOP-TOY. Ethical Supply Chain Management Types of services: Screening and analysis of business partners with regard to compliance or development potential Upgrading (including training) of business partners in human resources, labour practices, health & safety, environment and anti-corruption Case 1: Upgrading of business partners To comply with European B2B customers codes of conduct. What will the Trade Council Do? Make CSR analyses and plans of action for a number of suppliers and conduct CSR audits in a number of production facilities. The company will be certified in accordance with the European Business Social Compliance Initiative (BSCI), and be able to stay in business with its business-tobusiness customers. Case 2: Partner search To manage the risk for the company s brand posed by new suppliers with questionable CSR standards. What will the Trade Council Do? Integrate CSR screening in partner search for the company. The company will minimise the CSR risk for its brand and use CSR activities for branding and marketing. 7
stakeholder Management Types of services: Stakeholder analysis Stakeholder dialogue including with the public sector Community projects and development of partnerships and local network CSR communication and reporting Branding & Promotion through CSR Case 1: Branding & promotion through CSR The challenge To promote Danish businesses in South Korea through their CSR engagement. What did the Trade Council do? The embassy collected CSR stories from Danish companies and published them in a booklet.the embassy arranged the Danish CSR Week during which participating companies carried out CSR activities and allowed media to follow these. In relation to the launch of the project, the embassy hosted a media presentation event at the Danish ambassador s residence. What was the outcome? The Danish business community as a whole was branded and the individual companies gained valuable promotional material in terms of press coverages and a CSR booklet to give business partners. Case 2: Community project To position itself as the dominant and most socially responsible supplier within the industry Design CSR pilot project for company on the basis of a social needs assessment in selected communities. Assist in implementation of the project. A successful CSR project will show that the company takes on greater social responsibility for workers in its target industries than its competitors do. Will solidify company s hold on the market. People will know the name and buy the product. 8
I participated in the Danish Embassy in Beijing s anti -corruption seminar together with many other Danish companies. The course certainly inspired us in Martin Bencher Group to implement and outline a clear anti- corruption policy for ourselves, our staffs and our customers/vendors, and we furthermore were pleased that the seminar was vigorously pursued and followed up by the organizers reminding us to not only attend but also to actively implement what we learnt during the seminar. Bo H Drewsen, Chief Executive Officer, Martin Bencher Group. Political- Social Analysis Types of services: CSR sector reports Political - social risk analysis Assessment of specific politically sensitive issues Case 1: Risk analysis To minimize the risk in procuring raw materials from countries with difficult politicalsocial conditions. Conduct a social and political risk assessment in selected countries and sectors. The company will gain a better basis for understanding the social and political risks of doing business in the specific region. On that basis, they can decide whether or not they will do business in the country and which conditions suppliers must fulfill in order to engage in business with the company. Case 2: CSR sector reports To get familiar with CSR standards and practices within a given industry on a new export or sourcing market. Prepare a report that examines how CSR challenges have developed in the industry globally and within the country, and what these changes mean for companies seeking to establish themselves there. The company will gain an overview of the CSR situation within an industry in a selected country, and have a better basis for formulating its own CSR strategy. 9