Delivering in Doah

SandyHopes were high but realistic when COP18 started in Doah. I for one did not anticipate much after the colossal failure in Copenhagen (COP15). But believing that we have to solve or differences, I did hope that at least something would come out of all the effort put in.

From the outset the ambition was to reduce CO2 emissions significantly in-order to keep the Earth from heating up. Especially the developing countries had hoped for a deal that ensured the possibility for sustainable growth. The impact of climate change have been felt in all the countries that “normally” were against any kind of real restriction on emissions so there is plenty incentive to take action.

The initial target was two degrees reduction in global warming, but now it is more likely that we will hit four degrees no matter what we do. So when the Danish climate minister Martin Lidegaard looks towards 2014 for a start of the negotiation for a solution I for one do not think it is even close to a success. Or as he puts it.

“It is crucial that we will soon have taken decisions to ensure we can keep our political promises. Therefore, I am delighted that we have established that the climate change conference in 2014 will be about how we limit greenhouse gas emissions within the next few years – for example through energy efficiency improvements and the removal of subsidies for fossil fuels”, says Martin Lidegaard.

I do belive that if we continue down this path we are creating the seeds to our own destruction. The current politicians are thinking mare about the next election (for those countries that are lucky) than about how to lead their people safely and wisely to a better tomorrow. For better or worse they are the only ones that can make real changes to global warming if we like it or not.

I have attached the official Danish press release from the COP its in Danish, but the message is clear if you read between the lines – we took a real big step in the wrong direction.

Pressemeddelelse

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7 Issues that CSR needs to address if it is to be accepted by the mainstream business community

There are some hard questions that CSR needs to give real answers to in the coming years. As time goes it is become harder and harder to change any poor practices which are already becoming embedded in governance processes around the world.

  1. There is a lack of definition of CSR. We can’t measure what we cant define and CSR is not a exception in the past I have touched upon this issue as every year seem to come up with a new way of defining CSR normally because some new interest group have tried to make their mark.
  2. CSR have rapidly become another part of the ever-growing Public Relations industry. As CSR is a none-definable concept is has become the task of the communication specialists to come up with answers to questions raised be the corporate stakeholders. If we are to develop CSR in any meaningful context both in the terms of business development and in relation to sustainability in a wider context we need to focus on the activities of CSR rather than the branding of an organisation or product to a very narrow stakeholder group.
  3. Thanks to Porter and Kramer CSR is by many business people being synonymous with strategic philanthropy. Basically giving money away in the belief that in the long term they will return to the company in the form of customers and increased sales. With this very narrow view of the concept is it of cause to activate the whole Business-to-Business part of business. Because there is no real incentive for engagement in strategic philanthropy when you do not have any involvement with “real” customers.
  4. CSR needs to address the neoliberal argument that CSR is “giving the owners money away” if it is to gain any real footing in a broader sense. In many ways this is already happening as the concept have teamed up with ethics and corporate governance, strongly supported by several high-profile corporate scandals, which have highlighted the need for better governance. If CSR is to succeed it need to outlive it-self. This might seem an odd thing to say but if companies and organisations are going to be truly socially responsible they need not to think about whether a decision is good or bad in the context of social or ethical ground but it as to be part of how the organisations DNA. How it thinks, believe and communicate about and to all its stakeholders.
  5. CSR needs to be though in a global context and not just something for that is part of the developing world. In more and more cases CSR is being used as means to keep developing countries out of developed countries economies. As trade-barriers are being lowered on a global scale new forms of barriers are being raised in the form of standards and systems, which companies and not the countries have to abide by. This forms a second semi-legal layer, which is hard to enforce by any objective party and even harder to efficiently to govern. This is a form of governmentality, which is outside the normal control of individual governments, but is superimposed on countries economics by multinational corporations in the effort to live up to some ethical guidelines they themselves have invented. While e might argue that in part of the world there are weak governments were corporations needs to impose rules, which are above local law it is a dangerous path which the professionals and academics of working in the field needs to address.
  6. The issue ever elusive Business case for CSR also needs to be confronted. In my experience and I believe that this is also shown in scientific surveys is something profitable because business wants it to be so. Just having a webpage and a annual report that describes a series of activities is just not good enough. If managers want to make a profit of their CSR activities they need to focus on the things that matter. How do one think that telecommunication for bottom of the pyramid customers became a reality or the widespread acceptance of the business model of microfinance came to be? It is because it was directly linked to a clear need and ability of the company to do well by doing good and not some philanthropic endeavour which was more or less linked to the core business. If a company wants to make CSR profitable it need to use it resources to make it so and not leave it to the Marketing, Human Resource or Communication department to construct a more or less proven business case.
  7. Law or self-regulation? Is rapidly becoming a concern that both companies and the governments need to address. Should be let companies become so powerful that they can dictate democratic governments way of governing their countries or should we let intergovernmental institutions like the UN, EU or OECD decide? And can these institutions even enforce any legislation they might come up with? These are central issues, which will require some careful thinking. On one side we are unable to effectively govern social, environmental and governance issues on a global scale on the other side we are reluctant to just leave it to capitalism and a neoliberal dogma to solve things out. Some institutional proponents argue that we should have interstate regulations on these central issues of corporate governance. Maybe even a global tax system, but it would seem to be just another layer of inefficiency, which is both bureaucracy and unmanageable.

Should FDI be linked directly to engagement in CSR activities?

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Companies that engage in foreign direct investments (FDI) in developing countries should at least some degree have sustainability approach to their business processes or should they?

When we do our every day purchases in stores and shops in our local neighborhood there is a high possibility that we will be buying wares produced in a developing country. Some of the thing we buy will be as bought on the open market on the commodities such as a lot of Fruit, Cacao or Coffee etc. while others are produced, manufactured and exported as part of the same corporate supply chain. These production facilities are being put in place in order for the parent company (normally in a developing country) to save costs on procurement, wages and in order to better control their supply chain (upstream vertical integration).

FDI is characterized as an investment that is made in another country or territories, between a parent company and its subsidiary. Normally we will look at two types of FDI outward and inward.

An outward FDI is an investment that is backed by the government against all types of associated risks. This form of FDI is also closely related to governments export subsidies, partnerships like strategic philanthropy Risk and different forms of government aid in relation to establishing corporate presence.

When governments want to attract investments then they can use different forms of economic factors in order to encourage inward FDIs. These can include low interest loans, tax breaks like in special low tax areas, grants, subsidies, and the removal of different forms of restrictions and limitations. Factors detrimental to the growth of FDIs include necessities of differential performance and limitations related with ownership patterns.

Link between CSR and FDI

We would like to believe that we are serious about our efforts to develop and create a basis for sustainable business, but how could we encourage and facilitate such a process. In India there are concerns that the CSR movement will make life harder for companies trying to export seeing CSR as a threat to FDI because it puts pressure on some of the areas were developing countries are actually able to compete such as wages, working environments, labor rights etc.  

“Indian authorities think that the ISO standards could be used by developed countries as a way to decrease trade coming from developing countries. India has appealed that the ISO-26000 should not be deemed an international standard, guideline or recommendation to follow.” India Briefing News

This statement is to a large extent in contrast to the popular thinking that CSR is something that is welcomed in the developing world. The CSR standard is being developed by the International Standards Organization (ISO) to encourage more corporations to implement socially responsible practices in among other places their supply chain.

“The whole idea behind the move seems to be to achieve factor price equalization by imposing minimum wage standards on developing countries,” Biswajit Dhar, director general of Research and Information System for Developing Countries told the Economic Times.

The question is we morally obligated to implement the same standards as we would at home as we do abroad?

What if we turn the tables and tell companies that if they want to benefit from the economic advantages that come with setting up a business in a developing country, they will have to apply the same sustainability standards which are present in the region they come from. So for example if a local garment company sets up a factory in Bangladesh in order to get access to cheap labor it should as a minimum live up to the same standards as it is under in a local context in order for them to export garments back to the country of origin. Or if on IT-company sets up operations in Mumbai, India it would have to employ IT professionals at the same terms that they do it home.   

It’s a tempting thought that some of the social dumping issues that are part of the FDI thinking could actually be tackled through the active utilization of CSR.