Getting to the context of CSR – Letting mentally handicapped people contribute

I think that we are becoming to preoccupied with communicating about CSR, on the business case and on showing the value of CSR on the balance sheet, when it is really about business doing a difference in society. We think that when one lives in a welfare state like Denmark, where the government will tender to all your needs there wouldn’t be any need for locally context based CSR activities other than sponsoring the local football club. But the thing is that there are plenty of opportunities for companies to make a real difference to people who really appreciate the effort.

As one of the many activities I engage in is my work with the Danish association LEV. LEV is a private national association for retarded people, relatives and others that were formed in 1952. Basically covering handicapped people ranging from Asperger and ADHD to people with Downs and other relative heavy diagnosis. People, who can function in society, but need varying degrees of support and structure in order to do so.

One of the biggest issues that these handicapped people have is that they are being shoved away in state sponsored initiatives and offers, where they are isolated from the rest of society. One could call it that the “blanket of the welfare state” has covered them protecting people from harm, but making them unable to move. This is of cause done with the best of intentions shielding the weak in society from all the bad things that could happen (and maybe also shielding society from them). But an unfortunate side effect is that these people become isolated, their personal development stagnates and they feel that they are not offered the opportunity to contribute to society like everybody else.

However, I’m sure that there is room for one or two people in every workplace that is not exactly fitting into our perception of normality. I am also sure that many institutions have tasks that are waiting for employees, who will take pride in doing the tasks that we normally never get done, because they are routine and mundane. It may well be that an employee who is disabled does not have the same skills and resources as the rest of us, but they have something to contribute that we all can benefit from.

Some companies have already discovered that working in close corporation with local NGO like LEV on specific areas can actually make CSR very real to employees and customers alike. Even though they have not framed the initiatives as CSR in their own communication their activities are testimonials to some of the values that guide them.

To many companies CSR have become something that is detached from the day-to-day operations. Initiatives that are within communicated as CSR are more or less reduced to CO2 emissions, Codes of Conducts, Signing charters and different forms of philanthropy. But it does not have to be like that. CSR can actually be much more concrete, down to earth and close to the employees. By inviting a handicapped person into the organisation one gets a real idea about the values and ethical outlook of the company one is part of. The handicapped that are willing and able are more than happy to be invited into companies, where they can earn their own money and contribute on an equal basis with other employees.

I’m not saying that it is easy and it does require that the people who are involved also knows what they are going into, but the organisational benefits are huge. Not only to the individual handicapped person, but also to the employees that work with them and to the company as a whole.

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Research and education gets a central position within EU CSR policy

The Earth flag is not an official flag, since ...

Earth flag

While I do have some criticism of the new EU CSR policy there are some points were I think progress have been made. And within the field of education and research there are clear signs that lessons have been learned.

“The further development of CSR requires new skills as well as changes in values and behaviour. Member States can play an important role by encouraging education establishments to integrate CSR, sustainable development and responsible citizenship into relevant education curricula, including at secondary school and university level. European business schools are encouraged to sign the UN Principles for Responsible Management Education.”

I think this quote from the policy shows that CSR have hit the mainstream vein and that it should be taken serious not only by business but also by the institutions that teach our future leaders that there is such thing as ethics and morals.

Especially London School of Economics have been accused of having a lax relationship in terms of teaching their students what is right and what is wrong. Actually to such extend that business schools had to apologize for alleged harm that students had done in the wake of the first financial crisis. So this step is definitely a step in the right direction in terms of trying to integrate moral thinking into the curriculum.

Another subject is that EU will support research and the further development of the field of research.

“High quality academic research supports the development of business practice and public policy in the field of CSR. Further research should build on the results of projects financed under the 6th and 7th EU Framework Programmes. The Commission will explore opportunities for financing further research and innovation on CSR, and supporting CSR principles and guidelines in research funded still under the 7th Framework Programme, as well as under its successor, Horizon 2020, and in building the European Research Area.”

While there are no independent money to be found it is a strong signal to send that they will continue the funding beyond the 7th framework, which will end in 2011. So all in all not all is bad with the EU CSR policy there are beacons of light out there. At least as long as they don’t give the money to prove the concept of Shared value I will be a happy camper.

What are the best Blog and News sites to follow on CSR and sustainability issues?

Every morning I check my RSS feed and IGoogle on some of what I believe is some of the best sources of current issues on CSR and sustainability. The list is far from complete but form the basis of what I think I need to know to follow some of the issues that I’m concerned with.

Of cause the list is not complete and if you think that a link should be added then drop me a comment.

Massive clean-up at the UN Global Compact

Finally is what we have been waiting for actually happened. The UN has decided to expel companies that have failed to complete their communication on progress and this time it is not only a few rotten apples. 

For years the UN have been under critique for not enforcing their own policy on expelling companies that failed to report on their communication on progress or COP. On paper the COP is not a big task to complete and with “only” ten areas of reporting it should be possible for most companies even with small resources to come up with some type of reporting. But it seems that for a lot of companies it is more than just a small administrative issue.

“This is a significant move forward for the Global Compact,” said Georg Kell, Executive Director of the Global Compact. “It will provide deeper incentives at both ends of the performance spectrum, and help stakeholders critically assess the performance and progress of our companies.”

This step brings the number of participating organizations down to 6600.

Among the companies expelled are names such as Allianz in France, Barclays Bank Gambia, Euronext France, GlaxoSmithKline Bulgaria, Air India, BASF (with several sites) and Nordea Bank Finland.

Here you can view the complete Expelled_List_2011_01_20.

I will try to digg deeper but I just wanted to spread the good word.

ISO14000 for SME

In order for small and medium size enterprises to make it among all the big companies out there they are often required to present documentation for their CSR efforts.

A new tool is provided from ISO called ISO 14001 Environmental Management Systems – An easy-to-use checklist for small business – Are you ready? And it provides some of the basic checklists that most companies will ask for in a supplier.

ISO claims that some 223000 companies are now using their environmental standard and it is bound to have an effect on subcontractors around the world. It has for a long time been nearly impossible for SMEs to provide documentation for the environmental management work but with this new tool they at least have a fighting chance to get into the game.

I for one welcome the initiative. For years SME have had to invent their own systems for coping with customer pressure now they will have a affordable system that can be handled with the minimum of resources required. I have in the past been quite critical of some of the stuff that ISO does but sometime they do get it right and this is one of those times. See more here.

New approach to bank bonuses in the UK

We might all agree that the lesson learned from the financial crisis is that greed is not always as good as we might have wished but there have only been a few real legislative changes made in order to really confront some of the central issues.

The Financial Services Authority (FSA) is the governing body who is tasked with regulating the financia services in the UK and they have taken an important first step. Until the 31st of January 2010 financial institutions could pay bonuses only based on share price, earning per share or other stock related performance. This meant that the only incentive for bank and financial instruction executives to do better was to nurture this one stakeholder namely the shareholder and in many instances this meant themselves to a large extend.  

In the code that the FSA have issued it has been put this way “Long-term incentive plans should be treated as pools of variable Remuneration. Many common measures of performance for long-term incentive plans, such as earnings per share (EPS), are not adjusted for longer-term risk factors. Total shareholder return (TSR), another common measure, includes … dividend distributions, which can also be based on unadjusted earnings data. If incentive plans mature within a two- to four-year period and are based on EPS or TSR, strategies can be devised to boost EPS or TSR during the life of the plan, to the detriment of the true longer-term health of a firm.”

And it continues

“Firms that have long-term incentive plans should structure them with vesting subject to appropriate performance conditions, and at least half of the award vesting after not less than five years and the remainder after not less than three years.”

I see this as a important first step for the financial institutions to confront the root cause issues that they for so long have been unwilling to tackle. While the 13 principles of the code in many ways resemble what we have seen in other governance codes such as descriptions of Risk and Governance control functions it goes new ways in forcing executive to think about what is going to happen to the company in five or ten years from now.

As we saw during the crisis it was not a one person greed that led to the down turn and destruction of capital it was structures build up ten or fifteen years ago that formed the cornerstones of a disaster waiting to happen. And while much of the blame can be put on the governments of the world in not understanding the ramifications of their own laws there is no doubt that a lot can be done in the area of governance and better business control systems.

There are especially two things that spring to mind when I see the code. First is the Exceptional government intervention which applies to companies that have been getting government assistance and have to apply to a special set of norms. The principles effectively put a cap on the amount that can be given in reunification to be limited to a percentage of the net revenues and the elimination of variable bonuses.

 The second is principle number eleven that states that “A firm must ensure that variable remuneration is not paid through vehicles or methods that facilitate the avoidance of the Remuneration Code.”. This means that companies no longer can hide money in the books in order to pay extra funds to executives and high ranking managers. While there might be a public outcry about bonuses there it has been less obvious that money have been channeled through alternative streams in order for companies to avoid public scrutiny. One could say that companies that just paid bonuses, however high, were in fact more honest as they actually showed on their books what they were doing.

Below you find the FSA 13 principles as they are outlined I have also attached a link to the final report here.

Code Principle Handbook references (SYSC)

1: Risk management and risk tolerance

2: Supporting business strategy, objectives, values and long-term interests of the firm

3: Avoiding conflicts of interest

4: Governance

5: Control functions

6: Remuneration and capital

7: Exceptional government intervention

8: Profit-based measurement and risk adjustment

9: Pension policy

10: Personal investment strategies

11: Avoidance of the Remuneration

12: Remuneration structures

13: Effect of breach of the Remuneration Principles (voiding and recovery)

Merry Christmas everybody

Christmas in the post-War United States

Image via Wikipedia

Well after what seems like only a few moments it is already Christmas and time for holidays. I will see if I get a post or two in between now and the New Year but if not I would like to thank you for reading my posts.

My plans for the New Year is to post even more on SRI related material and revealing facts about the world of responsible investments. Furthermore, I plan to have even more subjects related to the communication both in relation to the companies and investors but also related to other stakeholders like Governments, NGO and CSOs.

I just looked at the UN PRI and they had put 86 companies on their observation list so I do not think I will run out of subjects to write about anytime soon.

Have a great Christmas and New Year.

Jacob