Csr13 5(imple)

Implementing, Monitoring Measuring & Reporting CSR

Important Websites

www.unglobalcompact.org www.bitc.org.uk www.globalreporting.org www.globalsullivanprinciples.org www.accountability.org.uk www.oecd.org www.iso.org www.ftse.com www.dowsustainabilityindexes.com

Identifying the Company’s CSR level

ValueCreation

Harm Minimization

Compliance

Key Requirement for Implementation of CSR activities

Motivation and commitment

Budget for the CSR Activities

Human resources

Steps for Operationalizing CSR

Operationalising Corporate Social Responsibility

Trigger

Motivate Management

Form CSR Core Group

Identify Focus Areas

Design and Implement CSR Action Plan

Report and Communicate CSR Initiatives

Monitor and Evaluate CSR Action

Operationalizing CSR

• Trigger : The process normally begins with a trigger or an event that requires management attention and action. This trigger or motivation can come from a product, workplace crisis, from external pressures or from inner values and principles.

• Motivated Management : Motivated management formulates the CSR Policy and describes the Vision and Mission Statement of the Company.

•Written CSR Policy ensures a common understanding amongst Board members, will define how much and what a company wants to achieve and will ensure effective implementation.

•The CSR Policy of the company should clearly define the key stakeholders and their level of involvement.

Forming a CSR Core Group : Management should form a Core Group or a Committee. A core group will be responsible to plan, execute, monitor, evaluate, report and communicate the progress and impact of CSR programmes.

The Core Group will be responsible to identify the resources, execute planned activities and sustain the commitment for motivation to responsible business practices.

Operationalizing CSR (Contd.)

Operationalizing CSR (Contd.)

CSR CORE GROUP MEMBERS CEO or MD should be the Chairman of CSR

Core Group and responsible for overall coordination and decision making.

CSR Personnel Human resource personnel : Employee

Welfare, Employee Volunteering Corporate Communication and Public

Relations Personnel Finance Personnel

Identify the Focus Area The CSR core group must identify the focus

area of the company. The focus area will be based on the CSR Policy, Vision and Mission of the Company.

For example: Orchid Hotel, CSR action is focussed around environmental issues.

Tata Group thru’ TCCI focuses on community & environmental issues in Tata Companies.

Operationalizing CSR (Contd.)

Design and Implement CSR Action Plan The CSR core group will design and

implement the CSR action plan for the company, integrating company values, focus areas and resources.

Operationalizing CSR (Contd.)

•Monitor and Evaluate CSR Action :Monitoring and evaluating CSR action helps to analyze the impact of CSR action and plan future actions.

•This step is critically important to boost the morale and sustain motivation of the core group and employees to sustain CSR action.

• Report and Communicate CSR Initiatives: The impact of CSR initiatives should be reported and communicated under different focus area like employee welfare, environment, community, etc.

•Communicating CSR action to all stakeholders can act as an incentive to broaden the CSR initiative.

Operationalizing CSR (Contd.)

Emerging Areas of Corporate Social Responsibility

Social Responsibility

• Respect for Human Rights

• Socio-economic development

• Employee Welfare

• Consumer Protection

• Respect for National Sovereignty

• Resource Sharing

• Corporate Community Investment

• Socially Responsible Investments.

Business Responsibility

• Tax Compliance

• Corporate Governance

• Investment in R & D

• Academic Research

Stakeholder Involvement

• Proporgation of principles and ethical values enshried in the organisation to all stakeholders

Environmental Responsibility

• Environmental Friendly Technology

• Ecofriendly Waste Disposal

• Preventive and Precautionary control of environment pollution

• Rectifying environmental damage

• Bio-diversity Preservation

Which are the areas where a company can implement CSR activities?

Typology of Corporate Programmes to Promote CSR

CSR PROGRAMS

Corporate Structure&

Governance

Human Resources

Labour & HumanRights

Environmental Management

Community Involvement &Economic Development

Marketplace InitiativesWorkplace

Initiatives

Labour and Human Rights Initiatives

Engagement with unions and adherence to union standards

Codes of conduct that set standards for a company or entire industry on labour treatment

Responsible supply chain management ensuring that suppliers adhere to company’s code of conduct

Product design and development

Human Resources Initiatives

Health and other insurance benefits Employee recognition and rewards Equal opportunity, diversity, diversity

training and religious freedom Work/life balance and wellness

programs Employee compensation for

downsizing, plant closing and reengineering measures

Volunteering in local communities Health and safety of the job

Environment Management Initiatives

Environment supply chain management

Consumption reduction Natural resource stewardship Alternative energy Green real estate development and

ecological building design Clean technology innovation Product and packaging design End-of-life-cycle product stewardship Philanthropy and sponsorships

Why measure, monitor and report CSR?

Measuring , Monitoring & Reporting CSR

Satisfy regulators To determine the level of compliance with

statutory requirements Accountability Avoiding action from pressure groups and local

communities Avoid reputation (and hence business) risk Improve brand (targeted at customers,

employees, investors and suppliers) Improve financial performance Plan future actions

Measurement through extra-financial ratings 

Company’s fitness to manage risks in Four Categories:

a) Governance/Business Ethics: code of conduct, bribery & corruption

a) Environment: emissions, resources, climate change, ecosystems

c) Social: product safety, marketplace, community, human rights

d) Employment: diversity, recruitment, strategy, workplace condition

Measurement of Community Initiatives

Cash value of community support as a percentage of pre-tax profit.

Impact evaluations carried out on community programmes such as improved educational attainment, number of jobs created, professional support for community organizations etc.

Project progress and achievement measures Perception measures of the company as a Good Corporate

citizen Positive and negative media comment on community

activities Individual value of staff time, gifts in kind and

management costs Frequency of formal and informal dialogue between the

stakeholders Measuring impact on the beneficiaries.

Measurement of Workplace Initiatives

Workplace profile (race, gender, disability, age, etc) Staff absenteeism Number of legal non-compliance (on health and safety,

equal opportunities and other legislation) Number of staff grievances Upheld cases of corrupt or unprofessional behavior Staff turnover Training and development provided to staff Pay and conditions compared against local equivalent

averages Workplace profile compared to the community profile for

the travel to work area or equivalent Evaluating impact as a result of downsizing, re-skilling,

etc Perception measures of the company (eg: equal

opportunities, work/life balance)

• Overall energy consumption

• Water Usage

• Quantity of solid waste produced (measured by weight/volume)

• Upheld cases of prosecution for environmental offences

• CO2 / Greenhouse gas emissions

• Use of recycled material

• Positive and negative media comment for environmental activities

• Environmental impact over the supply chain.

• Level of waste that is recyclable.

Measurement of Environment Initiatives

Measurement of Marketplace Initiatives

Number of products complaints regarding products and services Advertising complaints upheld Complaints about late payment of bills Upheld cases of anti-corruptive behavior Customer satisfaction levels Customer retention Provision for customers with special needs Average time to pay bills to suppliers Extra sales gained attributable to social policy/ cause related

marketing Customer loyalty measures Recognizing and catering for diversity in advertising and product

labeling Perception of a company as a desirable commercial partner Social impact, costs or benefits of core products / services

Measurement

Internal Performance Management

External Reporting

Types of Measures

• Internal operational measures

• External reports (auditable)

• Performance Standards

• Accreditation

• Self Assessment / Audit tools (for internal or external use)

Different measures for different purposes

CSR Measurement Table

Measuring CSR

Few Measurement Tools

The Global Sullivan Principles

In 1971, Reverend Leon H. Sullivan, a Human & Civil Rights, leader was appointed to the Board of Directors of General Motors, becoming the first African-American to serve on the board of a major corporation.

Six years after joining the board of General Motors, Sullivan developed the Sullivan Principles, which became an international standard for businesses operating throughout the world. The Global Sullivan Principles of Social Responsibility is a voluntary code of conduct built on a vision of aspiration and inclusion.

The aspiration of the Principles is to have companies and organizations of all sizes, and cultures, working toward the common goals of human rights, social justice and economic opportunity.

The Equator Principles (www.equator-principles.com).

For a number of years, banks working in the project finance sector had been seeking ways to develop a common and coherent set of environmental and social policies and guidelines that could be applied globally and across all industry sectors.

In October 2002, a small number of banks convened in London, together with the World Bank Group's International Finance Corporation (IFC), to discuss these issues.

The Banks present decided jointly to try and develop a banking industry framework for addressing environmental and social risks in project financing. This led to the drafting of the first set of Equator Principles by these banks which were then launched in Washington, DC on June 4 2003 and updated in July 2006

Rating Indices

Rating indices are generated to compare companies on specific aspects of CSR and can produce pressure on companies to improve their performance in those areas. Participants in indices such as the Great Place to Work annual index select themselves to showcase their human resources achievements.

Investment indices such as the Dow Jones Sustainability Indexes (www.sustainability-indexes.com) sustainability provides information on the quality of management—a basic consideration for an investor making long-term decisions

DJSI

Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide .

The Dow Jones Sustainability Indexes are a cooperation of Dow Jones Indexes, STOXX Limited and SAM Group.

Currently 66 DJSI licenses are held by asset managers in 16 countries to manage a variety of financial products including active and passive funds, certificates and segregated accounts.

FTSE4

The Financial Times and the London Stock Exchange. (FTSE4)Good (www.ftse.com/ftse4good/index.jsp).

The FTSE4Good Index Series has been designed to measure the performance of companies that meet globally recognised corporate responsibility standards, and to facilitate investment in those companies.

FTSE brand make FTSE4Good the index of choice for the creation of Socially Responsible Investment products.

Reporting of CSR

What gets measured and monitored needs to be reported.

To whom should you report CSR? And How?

•To build trust

• To demonstrate clear purpose, vision and mission

• To enhance business reputation

• To provide information to interested stakeholders

• To demonstrate commitment to operate business in a responsible ways

• Drive forward change and stimulate dialogue

• Reward employee volunteering

• To create awareness

Importance of Reporting

Reporting methods

Key methods of accounting are as follows:- Descriptive performance reporting- Quantitative reporting- Full cost reporting- Triple bottom line reporting

Descriptive performance reporting

Such disclosures are the most commonly made by entities

They appear in a stand-alone report Take the form of an “inventory” of

CSR Typically contains “good” news May be regarded as the “smiling

faces” approach to CSR

Descriptive performance reporting

The inventory commonly includes:- Physical resources and environmental contributions- Energy- Human resources- Product or service contribution- Community involvement- Other

Problems with this approach:- The list of headings and related issues is virtually limitless- Difficulty in obtaining benchmarks by which to compare and contrast an entity’s performance- Captured by marketing departments and reflects a “feel good” (i.e. soft) approach

Reporting is based on attempts to quantify an Reporting is based on attempts to quantify an entity’s social and environmental interactionsentity’s social and environmental interactionsAn entity may, for example, attempt the quantify An entity may, for example, attempt the quantify the environmental impacts of its products over the environmental impacts of its products over their life cyclestheir life cycles

Quantitative reportingQuantitative reporting

Full cost reporting

Such systems are intended to include in accounting and economic numbers all the potential/actual costs and benefits including environmental and social externalities

Impediments to Full Cost Reporting

- Measurement of financial values- Data availability- Additivity of measurement unit- Reliability of measurement- Suitability of certain estimates

Triple bottom line reporting (TBL reporting)

“Triple bottom line” or “sustainability reporting”, the focus is widen to embrace the economic, environmental and social performance of entities

Economic bottom line” refers to the traditional bottom line as well as to issues relating to the long-term sustainability of an entity’s costs, of the demand for its product, profit margins and so on

“Environmental bottom line” encompasses the sustainability of the entity’s use of natural, renewable or substitutable resources and its restoration performance

“Social bottom line” is concerned broadly with social capital with a focus on human capital, such as in the form of public health, skills and education, and more generally with society’s health and wealth creation capabilities

TBL reporting method

The implementation of a TBL reporting approach to CSR is an incremental process, dealing with the complex and contestable issues involved in attempting to effectively integrate economic, environmental and social performance measurement into a single report

Ways of Reporting

Ways of Internal Reporting

• Team briefings

• Procedural notes

• Training sessions

• Internal magazines

• Internal compliance or audit reports

• Intranet

• Notice boards

• Site locations

• Specific reports

Ways of External Reporting

• Annual reports

• Websites

• Stand alone reports

• External magazines

• AGMs

• Media outlets

• Corporate videos

• Speaking platforms for senior managers