1 CORPORATE SOCIAL RESPONSIBILITY IN GLOBALIZATION .Gholamhossein Davani Chairman of Dayarayan Auditing &Financial Services Firm (RSMi Iran) Member of.

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CORPORATE SOCIAL RESPONSIBILITY IN

GLOBALIZATION

Dr.Gholamhossein DavaniChairman of Dayarayan Auditing &Financial Services Firm

(RSMi Iran)

Member of High council of Iranian association of Certified Public Accountants (IACPA)

IMA,IIA,AAA,BAA,EAA,CAAA,AIA,CFE

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Ladies & Gentlemen.

I am very glad to have the opportunity to speak at this conference, as it gives me the chance to stress the importance of the corporate social responsibility in globalization.

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Population=6,525,000,000GDP= $43,920,000,000,000Oil Product= 79,650,000 (BBI/day)Oil proved reserve (BBI)= 1,349,000,000,000Purchasing Power Party (PPP)= $ 59,590,000,000,000Export= $ 10,320,000,000,000Import= $ 10,270,000,000,000Labor Force (Person)= 3,001,000,000Oil Consumption (BBI/Day)= 80,100,000Internet users= 1,018,057,389Telephone- mobile cells= 1,752,183,600Debt-external= $38,540,000,000,000Natural Gas- Proved reserves (Cu-m)= 174,600,000,000,000Natural Gas-Export (Cu-m)= 667,600,000,000Daily transaction= S 1,300,000,000,000 (60 times of industrial goods)CHIP= Clearing House Inter-banks Payment System Every Minutes 2 B.US Every day = $1,000,000,000,000Daily transaction= $ 1.300.000.000.000 (60 times of industrial goods)CHIP= Cleaning house inter banks payment system every minutes 2 B. US DollarsEveryday= $ 1.000.000.000.000

World at a glance 2006

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Telephone1,206,315,500

Internet users1,018,057,389

Airplane49,024

Roadway32,345,165KM

Railway11,115,205KMWorld’s import

10,270 Billion USD

World export10,320 Billion USD

Gas Proved Reserve174,600,000,000,000) Cu-m(

Gas Import828,000

)Cu-m(

Gas Exports667,600,000,000

)Cu-m (

Gas- consumption2,820) Cu-m(

Oil- proved reserve1,349,000,000,000) BBI(

Oil production 79,650,000) BBI/day(

Oil Consumption80,100,000

)BBI/day(

Oil export7,920,000Bbi/day

Labour force3,100,000,000

Mobile cell1,752,183,600

World at a glance 2006

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Outlook of world 2006

GDP

Official rate

Billion

Export

Billion

GDP

Percent

Current price

GDP

Purchase

per capital

PopulationOil product

BBI/DayOil BBI/DayOil reserveGas reserve

World43,92010,32047,76659,5906,52583,000,00082,590,0001,326,000,000,000172,200,000,000,000

Euro13,3101,3184543512,1804863,172,00014,700,0007,335,000,0007,335,000,000

USA12,47092742,00012,4102987,610,00020,730,00022,450,0005,451,000,000,000

Japan4,84855030,7003,914127120,6005,353,00029,290,00039,640,000,000

Germany2,7471,01629,8002,45482167,4002,650,00039,600,000279,100,000,000,000

UK2,21832730,9001,869602,075,0001,827,0004,500,000,000589,000,000,000

France2,06744330,0001,8226277,6901,977,000144,300,00012,770,000,000

China1,7907526,3008,1821,3133,631,0006,534,00016,100,000,0002,350,000,000,000

Iran178558,100552683,979,0001,510,000135,500,0026,620,000,000,000

India720773,4003,6691,095758,0002,450,0005,600,000,000835,000,000,000

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World Military expenses 2006

USA518

China81

France45

Japan44

UK42

Germany35

India19

Iran4/3Source: CIA Fact book 2006

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DescriptionWorldUSAEUChina

Export(Billion $)10,3209271,318752

GDP(Billion $)43,92012,47013,3101,790

GDP (Per capital) PPP$ ---42,00028,1006,300

Big world economic 2006

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What is Globalization

Globalization as a decoupling of space and time, emphasizing that with instantaneous communications, knowledge and culture can be shared around the world simultaneously.

“Sociologist, Anthony Giddiness”

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Global village (one – world list)

Global village is a term coined by Wyndham lewis in his book “America and comic man” (1948) but Herbert Marshall Mcluhan (1911-1980). Also wrote about this term in his book “The making of typographic Man” (1962)

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Globalization is an umbrella term which refers to complex of economic, trade, social, technological, culture and political.

Global village idea is Electronic interdependence when electronic media replace visual culture.

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Elements of Global village (one-wordlist)

ConvergenceUniformityHomogenizationHyper-liberalism

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The History of Globalization

Globalization is an historical process that began

with the first movement of people out of Africa into other parts of the world. Traveling short, then longer distances, migrants, merchants, and others have always taken their ideas, customs, and products into new lands. The melding, borrowing, and adaptation of outside influences can be found in many areas of human life.

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Globalization in the era since World War II has been driven by trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

“Source:Wikipedia”

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World Great Transformation

Fire Discover Invention of Gun Invention of Printing Invention of Machine Invention of Computer Invention of InternetVirtual Organization

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Arising New Globalization

Globalization is a process that has been going on for the past 5000 years, but it has significantly accelerated since the demise of the Soviet Union in 1991.

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Timeline of GlobalizationAge of Imperialism-1900

Great Depression- 1929

World Economic Forum (WEF)-1971

-1986 Dwellers land

General Agreement on Tariffs and Trade (GATT)-1986

Montreal Protocol-1987

Fall of Berlin Wall-1989

Collapse of Soviet Union-1990

Union European-1992

Un World Conference on Human Rights-1993

North American Free Trade Agreement (NAFTA)-1994

World Trade Organization (WTO)-1995

International criminal court-1998

Euro adapted 12 countries -2002

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Effects of Globalization

E-governance E-trade E-bank E-learning E-(Virtual) Organization

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Year 2000: 30 trillion – 5 billion people – 20% global GDP Year 2050: 140 trillion – 8 billion people – 40% global GDP

(assuming 3.5% growth)

Global Gross Domestic Product (GDP)

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New world Discipline

The fall of the Berlin Wall and the collapse of the Soviet Union ended the cold war between the forces of capitalism and socialism with capitalism triumphant. The development of the internet made possible the organization of business on a global scale with greater facility than ever before.

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Importance of Ethics

“There is no such thing as business ethics….There’s just ethics; and we all have to practice them every day in everything we do.”

Peter Drucker

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Social Responsibility

The currency and general relevance of social responsibility and sustainable development (SR/SD) to society is seen in such areas as investor interest in ethical mutual funds, government lists of threatened or endangered species, and pollution control mandates established by public policy setters. Indeed, business, government, and society are caught up in a debate over how this planet’s scarce resources are to be preserved and used.

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What are SR/SD

These are voluntary initiatives with a global constituency that can also be defined as multi-sect oral, in that they can be applied in a wide range of industries. They have all evolved through social partnerships involving some elements of business, governments, labor organizations and non-government organizations. They all take a multi-stakeholder approach to corporate citizenship issues.

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Elements of Social responsibility

• Community• Diversity• Environment• Ethics• Financial Responsibility• Human Rights• Safety

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The Global Eight

1-The UN Global Compact

2- ILO conventions

3- The OECD Guidelines for Multinational Enterprises

4- ISO 14000 Series

5- Accountability 1000

6- The Global Reporting Initiative

7- The Global Sullivan Principles

8- Social Accountability 8000

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Timeline of Corporate Governance

The Cad bury Report (1992), UK Green bury Report (1995) , UK Hampel Report (1998), UK The Smith Report (2003), UK The Higgs Review (2003), UK The Company Law White Paper (2002) Sarbanes- Oxley Act 2002 USA The Tyson report on the Recruitment Development of Non-Executive Directors (2003) The European Commission’s Action Plan for Company Law and Corporate Governance (2003)

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Corporate Governance

The good corporate governance needs to address not only boards of directors, committees, and legal and regulatory issues, but also business practices and ethics, disclosures and transparency, enterprise risk management, monitoring, and communication. That it's a whole set of systems and processes.

“It's not just narrowly focused on compliance with Sarbanes-Oxley.”

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Accountability

The objective of accountability towards stakeholders requires information about general issues such as product safety, the environment, employee relations, etc. An ethical bookkeeping system collects data systematically about the organization's ethical behavior, which is relevant for stakeholders. This process is most likely to include "hard" information, including for instance complaints of stakeholders, business accidents or fines for unethical behavior .

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Different Roles in Accountability & Corporate Governance

Role of chief of the board Role of audit committee Role of non-Executive managers Role of internal audit Role of shareholders annual meeting Role of Human resources Role of transparency

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Traditional view of business strategy and Social Responsibility

Industry Structure

Resources

Corporate values and ideology

Stakeholders

Business Strategy

Social Responsibility

Competitive Advantage

Social Performance

Financial Performance

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Integrated view of business andsocial strategy

Industry Structure

Resources

Corporate values and ideology

Stakeholders

Business StrategyCompetitive Advantage

Financial Performance

Social Responsibility

Social Performance

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Economic Responsibility (Must be done) Ethical Responsibility (Better to do) Law responsibility (Obliged to do) Voluntarily Responsibility( Free in do)

A.B. Arky Carroll

Different Corporate Responsibility

Sustainability…

“Sustainable development is a very simple idea. It is about ensuring a better quality of life for everyone, now and for generations to come.”

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Sustainable Company

The systems and processes of corporate governance also should consider a diverse group of stakeholders, not solely shareholders. "Most corporate governance focuses just on shareholders. But a shareholder's interest is different than an employee's interest, which is different than the interest of a community, creditor, or supplier. And too often, the focus of shareholders, management, and everyone else in the company is on increasing shareholder value .

Furthermore, this responsibility is often on the backs of the community or the employees or the suppliers, and that is not in their interest.

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History of Global Reporting

The Global Reporting Initiative (GRI) was conceived in 1997 by the Boston-based Coalition on Environmentally Responsible Economies (CERES) in collaboration with the Tells Institute. Over the past five years, the GRI has evolved into a set of reporting criteria on all aspects of a company’s performance. The initial draft standard was ‘field-tested’ in 1999 by over 20 companies and released in June 2000. A revision was published in 2002.

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It is possible for standards to have several of these characteristics:

• Principles (Global Compact and Global Sullivan Principles)

• Standards (GRI, OECD Guidelines, SA8000, AA1000S, and ILO Conventions)

• Foundation (ILO Conventions, AA1000S)

• Process (SA8000, AA1000S, ISO 14000S)

• Performance (SA8000, OECD Guidelines, and ILO Conventions)

• Certification (SA8000 and ISO 14000 Series)

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What is GRI

The GRI has been adopted by the UN Environment Programmed (with funding from the UN Development Fund) and is becoming an independent organization. The GRI is built on a simple premise. By providing a broadly-agreed mechanism, reached through negotiation between the partners in the process, to measure environmental and social performance, the GRI aims to assist investors, governments, companies and the wider public to understand more clearly the progress being made towards sustainability. The use of a common framework is seen as a way to improve related analysis and decision making.

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SA/CSR

After Enron Clops some terminologies same Social audit (SA), corporate social responsibility (CSR) have been relief. These days, corporate social responsibility (CSR) is common currency but a “currency” that is rather devalued. The phrase is so over- and poorly used that it begins to lose any meaning. Any proper definition of CSR would require a categorical standard of values. This is lacking. In fact CSR now means many different things to many people.

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Social Responsibility

In the globalization area auditors' responsibilities have changed to corporate social responsibility that main basic is related to Ethics. Although many auditors are burning the midnight oil to familiarize themselves with the new regulations and to prepare for their role in the compliance process, the scope and complexity of change has made the learning process a significant challenge.

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Global Reporting Initiative (GRI)

P= M × E (i)

P= Share price/market cap

M= Multiple

E= earning per share

i= Social / Environment

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The Global Eight

1-The UN Global Compact2- ILO conventions3- The OECD Guidelines for Multinational Enterprises4- ISO 14000 Series5- Accountability 10006- The Global Reporting Initiative7- The Global Sullivan Principles8- Social Accountability 8000

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Elements of social responsibilities & sustainable development

International Labor Organization (ILO)UN Declaration on the right of the childSex Discrimination in employmentHuman RightEnvironment Protocol Social Security Commerce Code & Fair competitor

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New responsibilities of Managements

Social ResponsibilitySustainable developmentCorporate Governance Business EthicsSustainable developmentTransparencyAccountability

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Labour lawSocial Security LawTax actCommerce LawEnvironment LawStock Exchange regulationGeneral account office (GAO)

Iranian managements legal responsibility

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Iran Corporate Governance Include :

Partner Rotation-Transition Questions Non-audit Services Audit Committee Pre-approval Audit Committee Communications Full Disclosures "Cooling Off" Period

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Yearly World Stock Value Exchange Transaction

19907,900

200026,000

200331,000

200541,000

Amount: Billion$

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Stock Exchange 2006Amount: Billion$

New York15,451

Tokyo4,614

London3,715

Germany1,638

Spain1,323

Swiss1,212

Euro next3,708

Hong Kong1,715

TSX1,701

Tehran Stock Exchange38

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Tehran Stock Exchange at a glance

Description19912000200120022003200420052006

Index Shares prices4722,9783,7585,06211,38012,1139,46010 ,078

Market value

Million USD2676,7848,44612,78733,62535,47035,47237,615

Companies Listed129307318334383426432435

Gross Domestic Product (GDP) Billion USD

97/396115116133161192245

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Sources1- Auditors’ responsibility on globalization PPT Gh. Davani.2006

2- Stockholder Engagement standard, Institute of Social & Ethical accountability.

3- GRI and the transparency imperative, why GRI, global reporting initiative.

4- Living corporate citizenship by persons education Ltd.

http://www.business-minds.com

5- Corporate social responsibility & the global Sullivan principle.

6- Ethics after Enron: PPT. Where are we, and where are we going, University of San Diego 2003.

7- The world fact book www.cia.gov

8- IMF- www.imf.org

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