Business Question

CSR, Measurement andImpact Analysis
OBJECTIVES
And the end of the session, students are
expected to:
✓Understand the historical work on
measurement.
✓Discuss the measurement system along
with practical applications.
Corporate Social Performance (CSP)
– It is a set of descriptive categorizations of
business activity, focusing on the impacts
and outcomes for society, stakeholders
and the firm itself.
– Acts as a bridge by which the firm
connects itself to information, stakeholders
and issues.
CSP concerns:
Concerned on harms and benefits resulted
from business organization’s interaction with
its larger environment including:
– Social
– Cultural
– Legal
– Political
– economic
– natural dimensions
Questions:
✓To whom are corporations responsible?
✓For what exactly?
Answer
• Businesses were responsible for
producing “social goods “as well as goods
and services for sale, and that every
business had an obligation to give back to
the communities that supported it.
Suggested conceptual
framework for measurement
3-P Model for the measurement of CSR:
1. Principles of social responsibility
2. Processes of social responsiveness
3. Products (outcomes) of social
responsibility
Global Reporting Initiative (GRI)
– GRI promotes the use of sustainability
reporting as a way for organizations to
become more sustainable and contribute
to a sustainable economy.
– Allows organizations to measure their
economic, environmental, social and
governance impacts and performance.
5-point measurement under GRI
1. Concept used
2. Definition
3. Conceptual framework
4. Indicators defined
5. Measures given
5-point measurement under GRI
1. Concept used: Sustainability reporting
2. Definition: sustainability reporting refers
to an organization’s public account of its
economic, environmental and social
performance in relation to its operations,
products and services.
5-point measurement under GRI
3. Conceptual framework: includes the main
feature, elements, plus the structure
G4 – the current version of GRI guidelines
5-point measurement under GRI
G4 focus:
• to help organizations produce
sustainability reports focused on material
topics.
• providing information on the issues that
are most critical for the organization to
achieve its sustainability goals and
manage its impacts on the economy,
environment and society.
General standard disclosure
– Provide a description of the organization
and its sustainability reporting process. It
is made up of seven types:
General Standard disclosures
Strategy and analysis
Organizational profile
Identified material aspects and boundaries
Stakeholder engagement
Report profile
Governance and remuneration
Ethics and integrity
Specific standard disclosure
(SSD)
– Provide information on the management
and performance of the organization’s
most critical sustainability issues.
2 Areas of SSD
1. Disclosure on management approach
2. Indicators
Sector disclosure
• GRI provides additional guidance and
disclosures that are sector specific and
that can be used together with the G4
Guidelines. (guidelines can be
downloaded from the GRI website)
2 Main differences
1. Under the General Standard Disclosure (GSD),
comprehensive report must address all GSD, but
for the core reports 22 GSDs do not need a
response.
2. Under specific standard disclosure (SSD), the
difference is on reporting of indicators. For core
reports, it is a minimum of one indicator related to
each material aspect, while for comprehensive
reports all indicators related to each material
aspect.
Measuring CSR or corporate social
performance: the CSP model
Corporate social performance
– A business organization’s configuration of
principles of social responsibility, processes
of social responsiveness and observable
outcome as they relate to the firm’s social
relationships.
Level 1: Principle of Social
responsibility
3 major elements:
1. Legitimacy – concerns business as social
institution
2. Public responsibility – concerns the individual
firm and its processes and outcomes
3. Managerial discretion – managers and other
organizational members are moral actors.
Level 2: processes of social
responsibility
Corporate social responsiveness is a business’
capacity to respond to social pressures.
3 elements:
1. Environmental scanning – assessment
2. Stakeholder management – mapping the
relationships of stakeholders to the firm.
3. Issues management – policies to be
developed to address social issues.
Level III: Outcomes (products)
1. Internal stakeholder effects – concerns
with stakeholders within the firm.
2. External stakeholders effects – examines
the impact of corporate actions on
persons or groups outside the firm.
3. External institutional effects – examine
the effects upon the larger institution of
business rather than on any particular
stakeholder group.
CSR measurement: elements,
indicators and measures
CSR measurement: elements,
indicators and measures
CSR measurement: elements,
indicators and measures
CSR measurement: elements,
indicators and measures
CSR measurement: elements,
indicators and measures
CSR measurement: elements,
indicators and measures
Any questions???
CSR, Social Accounting and
Stakeholder Dialogue
Objectives
• What the are stakeholders
• The process of identifying stakeholders
• How to engage with stakeholders and
some key techniques to use
• The practical limits of stakeholder
engagement
What are stakeholders?
➢Stakeholder – any person or organization
which affects, or is affected by an
organization.
Stakeholders
• companies relate to the rest of society
through their stakeholders.
• shareholders and company management
are stakeholders of their company.
• In order to be a stakeholder, the group or
individual in question must have a “stake”
in the company
Stakeholders of commercial
companies
• Customers
• Suppliers
• Employees
• Community
• Shareholders
Systematic approach of
grouping stakeholders:
• according to whether they are essential to
the survival of the business called primary
stakeholders.
• whether there is a commercial or legally
defined relationship with the group.
• how frequently the organization interacts
with it and,
• whether the group is particularly
vulnerable to the actions of the company
Analysis of issues of
stakeholders
Beyond seniority, other groups of staff that
could merit separate analysis could be
through their:
•
•
•
•
•
•
Role
Gender and sexuality
Age differences
Ability and disability
Ethnicity
Religious affiliation
Classifying stakeholders
Ways to classify stakeholders are:
✓How numerous are the people within the
stakeholder group?
✓ How frequently does the company interact
with them?
✓What is the nature of the relationship
between company and stakeholder (e.g.
contractual, indirect commercial, noncommercial, etc.)?
Some key stakeholders
1. Non-governmental organizations (NGOs)
• they are given special attention and
viewed as a useful source of issues and
ideas
• they are regarded with some irritation: they
are considered by some to be too negative
and may seem to lack legitimacy for what
they say.
Some key stakeholders
2. Supply Chain
• despite the fact that there is no (direct)
commercial relationship, for companies
that purchase on a large scale, there is a
strong influence by the company on the
conditions that obtain throughout the
supply chain.
Some key stakeholders
3. Consumers
• As with a number of stakeholder groups,
consumers can present as a complex of
different organizations, with some “real
people”, the individual consumers, behind
all of them.
Some key stakeholders
4. Unions
• they represent a formal way in which the
collective voice of workers can be heard.
• enjoy some legal recognition in some parts
of the world, with formal rights to be
consulted over issues, which affect their
members.
The environment as a
stakeholder
Some logic in including the environment
among stakeholders:
✓that it can be hard to identify the actual
people who may be affected by an
environmental issue.
Example: global warming
The environment as a
stakeholder
✓some environmental issues have no
corresponding stakeholder.
Example: Biodiversity
Special Groups
• The young, the old, the mentally
incapacitated and some of the disabled
represent another set of people who present
particular problems for stakeholder
identification, and for engagement.
Example: NGOs, such as Save the Children
consult children to develop their
understanding of their needs.
Stakeholder engagement
techniques
• Public hearings
• Deliberative polling
• Focus groups
• Citizen advisory groups
• Consultative groups
• Nominal group process
• Multi-actor policy workshops
• Charette
• Round tables
Market research
• defined as “the systematic collection,
analysis and interpretation of information
relevant to marketing decisions.
Market research
Relates to social impact in two ways:
• provide important information about these
stakeholders and about the social impact of
the organization.
• When companies research their
stakeholders to try to understand their social
impacts, they often use the techniques of
market research.
Case studies in stakeholder
engagement
Please refer to pages 149-150 for the case
The limits of stakeholder
engagement
1. Practical limits
a.there are some stakeholders with whom it
is very difficult or impossible to engage
directly, such as those who cannot speak or
are vulnerable.
b.when several different stakeholder groups
are present the weaker stakeholder may
simply remain silent.
The limits of stakeholder
engagement
c. the more powerful stakeholder may be
more articulate than others,
d. social conditions that make stakeholder
engagement impossible such as conflict
or war.
The limits of stakeholder
engagement
2. Absolute values
• Human rights and other international
norms of behavior might override
stakeholder engagement.
• Stakeholder dialogue should never be
used to ask stakeholders to give up their
human rights, such as their interest in their
own health for the sake of a medical trial.
The limits of stakeholder
engagement
3. Democracy
• National laws should not be “adjusted” in
the light of stakeholder dialogue.
• dialogue can be used to supplement
compliance with the law.
The dilemmas of conflict and
human rights
• Conflict provides a fertile ground for some
of the most serious human rights abuses.
• International companies may readily avoid
zones of open warfare in relation to new
investments.
Dilemmas
1. Planning and initial investment
• companies should assess the human
rights risks arising from a projected
investment; where there is low-intensity
conflict this may identify appreciable, but
not severe, risks connected with the
investment.
Dilemmas
2. Continuing operation
• Part of a company’s human rights obligation
is often seen to be working to persuade a
government to take its human rights
responsibilities more seriously.
Dilemmas
3. Withdrawal
• As a result of conflict a company may decide
to evacuate all expatriate staff.
• The company may also have local staff that
are at risk because of the conflict.
Dilemmas
4. End of life
• At the end of the natural life of a project, a
company may wish to withdraw from the host
country
• This may severely damage the local
economy
Question:
• How can the internet and new social
media be best used as part of stakeholder
engagement?
Any questions??
Small Business and Social
Responsibility
Objectives
• Overview of the general differences between
small businesses and large enterprises.
• Demonstrate how SBSR is different from
CSR
• Propose a model that could help to
systematically formalize small business
social responsibility.
Definition of SMEs
No. of employees
Turnover should
not exceed
Balance sheet
total should not
exceed million
Micro
Fewer than 10
€2million
€2 million
Small
10-49
€10 million
€10 million
Medium
50-249
€50 million
€43 million
In what ways are small businesses
different from large enterprises?
Small businesses can be differentiated from
large enterprises based on:
1.small-scale decentralization, and
2. flat organizational hierarchy.
In what ways are small businesses
different from large enterprises?
Based on five idiosyncratic features:
1.relatively limited number of products,
technologies and know-how;
2.relatively limited resources and capabilities;
3.an under-developed management system,
administrative procedures and techniques;
4. a disorganized and informal management style;
and
5.senior managers and/or their relatives and
friends being owners or founders of the firm
Advantages of small business
• generally independent,
• multi-tasking,
• cash-limited,
• based on personal relationships and
informality,
• Actively managed by owners, highly
personalized, largely local in their area of
operation
• and largely dependent on internal sources to
finance growth
From CSR to small business
social responsibility
Areas important in terms of social
responsibility orientation:
• governing for social responsibility,
• approach to the business case for CSR,
• language used,
• stakeholders
• trust, networks and social capital, and
• the tools and measurement
From CSR to small business
social responsibility
1. Governing for social responsibility
• Clearly defined mission, vision and policy
statements,
• responsibilities and accountabilities of
internal and external stakeholders,
• codes of conduct and systematic quality
assurance models
• Unlike large corporations, small
businesses do not formally report on their
social and environmental matters. But that
does not mean they do not engage in
responsible activities.
From CSR to small business
social responsibility
2. Approach to the business case for CSR
• Rather than seeking to maximize profit,
small businesses over the longer term are
on the whole “profit-satisficers”
• Cost, is an important driving force for small
businesses, since it is this that is closely
related to cash flow and short-term welfare
of the business, and its owners.
From CSR to small business
social responsibility
3. Language
• owner-managers do not often use jargon
such as “business ethics”, “sustainability”
or “CSR” to denote their practices.
• For them, it is a matter of fairness,
integrity, excellence in management or
conducting business in a responsible
manner.
From CSR to small business
social responsibility
4. Stakeholders
• main stakeholders of small businesses are
family, employees, small local competitors,
suppliers, local community and customers
• owner-manager is the primary decisionmaker—the principal as well as agent—
and holds the central position in the
stakeholder map
Small business stakeholders
From CSR to small business
social responsibility
5. Trust, networks and social capital
• Relationship with their suppliers and other
business partners is normally based on
trust and mutual support.
• small businesses tends to be involved in
close dialogue and consultation with their
stakeholders in order to organize their
socially responsible activities.
From CSR to small business
social responsibility
6. Tools and measurement
• Small businesses are less likely than large
firms to strategize their socially responsible
activities.
• owner-managers view social responsibility as
integral to the management of their everyday
business practices.
• they do not tend to use their social practices
as a strategic tool to gain public attention.
The process of small business social
responsibility formalization
Formalizing socially responsible practices
may bring advantages to small businesses,
including:
• improvement in the quality,
• production process,
• employee relations, and
• stakeholder relationships.
The process of formalization of
small business social responsibility
1. Evaluate
This is the first step:
• evaluate and identify the current situation
of the business practices
• develop an understanding of socially
responsible practices, and
• translate this into business values and
principles.
The process of formalization of
small business social responsibility
2. Plan
• To focus the small firm’s efforts on the
most important or urgent issues that the
firm should address.
• what matters to the firm in terms of social
responsibility
• where it feels it can make a difference.
The process of formalization of
small business social responsibility
3. Execute and communicate
• This step involves identifying and
overcoming any barriers in addressing
those issues, and
• developing a firm-level SBSR strategy
Some possible challenges may be in the
form of:
a. owner-managers’ personal characteristics
including their :
✓entrepreneurial goals,
✓experience,
✓time and
✓knowledge available
Some possible challenges may be in the
form of:
b. organizational characteristics including:
✓ resource dependency and limited power
to act independently, and
✓to drive others in their network towards a
common goal
Some possible challenges may be in the
form of:
3. contextual characteristics including the
channels through which stakeholder
interests are communicated to small
businesses
How the firm can overcome
barriers:
By effective planning and use of:
1. human resources by:
✓ consulting employees,
✓ appreciating their knowledge and
experience, and
✓ building their capacity
How the firm can overcome
barriers:
By effective planning and use of:
2. financial resources by determining the
required amount of funds and sources of
these funds to sustain the efforts.
How the firm can overcome
barriers:
By effective planning and use of:
3. external stakeholders by consulting:
✓ local community,
✓supply chain partners,
✓accountants,
✓ industry associations,
✓local political institutions,
✓ trade unions and so on
Conclusion:
• This chapter explained the CSR difference
for smaller firms, outlining as a result the
concept of small business social
responsibility.
• Social responsibility initiatives are not
necessarily formalized in small firms.
• challenges around CSR formalization in
small firms were discussed.
Dr. Khalid Jassim Bomtaia
QUIZ
Corporate Social Responsibility
Sustainable Reporting
Objectives:
• To discuss the role and significance of stakeholders in the context of sustainable
reporting
• Discuss the role of the Global Reporting Initiative (GRI) framework in enhancing
transparency and accountability in the corporate sustainability reporting of
companies in general and the chosen company in particular.
1
Task
This assessment requires you to research one local company in the Kingdom of Saudi
Arabia and answer the following:
1) Identify 3 specific stakeholders of your chosen company and discuss their role and
significance in the context of sustainable reporting. (3 marks)
1) Read the attached lecture slides carefully in order to answer each question properly.
2) Do your research about the King Fahd Causeway Authority. (https://kfca.sa).
3) After reviewing the attachments, link the internal and external stakeholders.
4) Discuss the role of the Global Reporting Initiative (GRI) framework in enhancing
transparency and accountability in the corporate sustainability reporting of
companies in general. (3 marks)
Refer to GRI slides “Chapter 5”.
5) Discuss the role of the Global Reporting Initiative (GRI) framework in enhancing
transparency and accountability in the corporate sustainability reporting of your
chosen company in particular. (4 marks)
Refer to attached slides.
6) The word count is between 900 to 1,000 words (excluding the title page, table of
contents, reference list and appendix).
Pls. Comply.
2