CSR FRAMEWORKS AND RATINGS

Why is CSR important for businesses?

A way of easily establishing and keeping trust with customers, communities and regulators Mitigating the social risks and problems Improving the public image of the firm Cut down business costs Attracts investors and many more

For achieving these long term goals, businesses create strategic plans and structured models, what is called as CSR Frameworks

Stages of CSR
Civil Need to involve all in sector, collective action
Realigns strategy to use CSR as competitive advantage

Strategic

Managerial

Moves CSR to core business managers & functions Cost of doing business, do just as much as need to Company faced with pain, criticism, defensive

Compliance

Defensive

Stages of CSR
Civil

Value Creation

Strategic

Current Trend

Risk Mitigation

Managerial

Historical Focus

Compliance

Defensive

Implementing CSR

Make business case (relevance) Engage stakeholders (internal & external) Map potential vulnerabilities/risks Develop CSR strategy Align with organizational culture/ change Monitor, measure, report Communicate to ALL stakeholder groups

Make a Business Case

A business case captures the reasoning for initiating a CSR model In a business case, the CSR or corporate governance policies are effectively defined, documented and communicated within an organization A case includes the commitment to conform all the requirements to implement the framework

Engaging Stakeholders

The organization identifies its stakeholders and describes its relationship with each individual group Organizations engages by continuous interaction with stakeholders on issues of significant concerns And also demonstrates an approach to express their views and opinions Finally organizations evaluate the stakeholders expectations

Identifying risks/vulnerabilities

Organizations identifies the business risks, which includes regulatory risks, risks associated to stakeholder involvement, damage to firms image etc. Organizations:
Assess

the likelihood and consequences of the

risks Transform these risks into CSR objectives Establish control mechanisms Maintain records of risk management policy

Develop CSR Strategy

A strategic planning includes the following steps:

Evaluation

of the stakeholders expectations Evaluations of the impacts of the organization Risk Management Policy Documenting the CSR objectives, targets and indicators Board Supervision

Monitor, Measure and Report

The organization shall establish methods for measurement of:

Stakeholder satisfaction and development Brand value and reputation Access to capital Environmental performance Risk profile

These measures are continually monitored and reported to the Audit committee which determines criteria that are best suited for the relevant circumstances of the organization

Communication with Stakeholders

Communication takes place between various employee levels and functions of the organization Receiving, documenting and responding to relevant communication from external interested parties Organization considers processes for external communication on its significant economic, social and environmental impacts Organization establishes and maintains monitoring activities and procedures to

CSR Framework

LG Electronics

CSR Vision and Strategy:

To

earn the trust of the stakeholders as a responsible and ethical corporate citizen To become a healthy organization in the market ecosystem and assume a proactive role in making the system healthier with our products and services To take care of our communities, help those in need become self-reliant, interface and communicate with a variety of stakeholders throughout this process, and form a trust-based relationship with them

LG CSR Principles
CODE OF ETHICS

GLOBAL LABOR POLICY

SUPPLIE R CODE OF CONDUC T

GLOBAL EESH POLICY

COMPLIA N-CE CODE OF CONDUC T

CODE OF ETHIC S

Creating values for customers Respect Based Management

Winning by the rules Compliance with local laws and regulations, completely fairly and uphold the highest standards of business conduct

COMPLIA -NCE CODE OF CONDUC T

GLOBA L LABOR POLICY

Respecting Human Dignity Uphold human dignity and value of all employees in terms of labor
SUPPLIE R CODE OF CONDUC T

1. Labor and Human Rights 2. Health and Safety 3. Environmental Impact 4. Ethics 5. Materials not obtained through illegal ways 6. Management System GLOBA L EESH POLIC Y

Considering effects on stakeholders and community Contribute to reducing non-financial risks and increase company values Observe International agreements and rules Reduce energy use, save and recycle resources and improve

CSR Framework

CSR - SUZLON
It means living our corporate values with the goal of: Having

minimal impact on the natural environment; Enabling local communities to develop their potential; Empowering employees to be responsible civil society members; and Committing ourselves to ethical business practices that are fair to all the stakeholders

Framework
A higher degree of sustainability can be achieved in business by balancing growth in all aspects of development

Transformative

Suzlon aspires to embody ethical standards that are not limited by legal compliance. Business policies, practices and procedures, from the perspective of sustainability are reviewed. Integrating the Corporate Social Responsibility perspective in Supply Chain Management. Minimizing footprints and engaging employees to be responsible civil society members are the goals of Transformative Corporate Social Responsibility Programs.

Responsive

Responsive initiatives includes: Environment initiatives to improve and conserve natural resources Livelihood initiatives to enhance livelihoods Education initiatives to impart literacy , vocational and life skill training Health initiatives to not only treat diseases but also ensure physical, social, psychological and spiritual well being Civic Amenities initiatives to improve availability to rightful amenities and services

Proactive

Guided by the corporate vision of 'Powering a Greener Tomorrow', it aspires to champion the cause of renewable energy. Proactive initiatives support national and international programs to deal with global issues such as climate change/global warming, natural disasters, international peace, youth development, cultural diversity, human rights, equity and justice.

CSR Ratings

Introduction

In terms of business history, this idea of measuring socially responsible behavior is a comparatively new concept. Obviously, the idea draws heavily on prevailing credit ratings and securities analysis.

Since CSR includes the socio-cultural paradigms, it is difficult to create a universal rating mechanism. Therefore, in spite of similarities between different frameworks, we have to provide for diversity and heterogeneity

Understanding CSR Ratings

CSR ratings, i.e. the assessment of companies on social, environmental and economic issues. The majority of the analyzed rating systems are based on the stakeholder-model. Still alive and getting stronger.

Paradigms of Sustainability Ratings

Corporate Citizenship Business ethics Corporate Governance Corporate Social Responsibility (CSR) Sustainable development Eco-efficiency.

CSR Reporting

Stakeholders today are holding companies responsible for nonfinancial performance on issues such as product quality, employee equity, community engagement, and environmental stewardship
Many stakeholders are demanding that companies prove themselves by openly sharing information on social and environmental policies, programs, and performance Effective CSR reporting and communication programs can build trust by sharing successes, challenges, risks, opportunities and strategic vision with consumers, employees, communities and investors Reporting can also act as a management framework to systematically track, evaluate and improve a companys CSR performance over time

Characteristics of CSR Reports

Goal of CSR rating is to build trust of the stakeholders Format is generally varied More qualitative Verification is optional Targeted both externally and internally Static and forward view Voluntary Is more engaging, interesting and creative than annual reports

Global Reporting Initiative

A sustainable global economy where organizations manage their economic, environmental, social and governance performance and impacts responsibly and report transparently

Generally accepted framework for reporting an organizations economic, environmental, and social Convened by CERES, with UNEP in 1997, first used in 2001 Multi-stakeholder focused Continuous improvement Allows comparisons across sectors Designed to elevate CSR reporting to same level as financial reporting Sector-specific reporting standards to allow for comparability Partnership with ISO 26000

Global Reportin Initiative:G3

GRI: G3

Launched in 2006 Guidelines features sustainability disclosure that organizations can adopt flexibly and incrementally, enabling them to be transparent about their performance in key sustainability areas G3s sustainability Performance Indicators are organized into categories: Economic, Environment and Social The Social category is broken down further by Labour, Human Rights, Society and Product Responsibility subcategories Indicator Protocols provide definitions, compilation guidance, and other information to assist report preparers and to ensure consistency in the interpretation of the Performance Indicators Technical Protocol provides process guidance on how to define the content of a sustainability report It proposes a generic approach on how to apply the Reporting Guidance for Defining Content and the Reporting Principles for Defining Content that are outlined in GRIs Guidelines

GRI: G4

Launched in May 2013 Focus of G4:

Reflect significant economic, environmental and social impacts Influence the assessments and decisions of stakeholders Organizations influence on upstream and downstream entities

The guidelines offer International reference for all those interested in the disclosure of governance approach and of the environmental, social and economic performance and impacts of organizations These guidelines are developed through a global multistakeholder process involving representatives from business, labor, civil society, and financial markets, as well as auditors and experts in various fields; and in close dialogue with regulators and governmental agencies in several countries

Why companies are migrating from G3 to G4

G4 is more user-friendly for beginners and experienced reporters Improvement in technical quality and clearer definitions Aligns with other reporting frameworks Offers guidance which leads to material reports (materiality) Offers guidance on how to link the sustainability reporting and integrated report Provides support to improve data search

CSR Rating Case Study

Microsoft in terms of CSR rating ranks number 1 in Asia Pacific, number 2 in Latin America and number 4 in North America and globally to it ranks 1st Microsoft has been awarded this ratings because due to its strong citizenship, workplace and governance practices, turning around the bad will generated in the early 2000s when it was criticised for using its market dominance to drive up consumer prices and put pressure on the competition with unfair business practices, the report says.

Contd...

Senior director of corporate citizenship at Microsoft, Dan Bross , puts the turnaround down to increased engagement in public policy discussions and transparency in the companys public policy agenda. Overall, Microsoft placed first in terms of governance and second in both workplace and citizenship behind Google and Walt Disney respectively. Of the 100 companies evaluated, only 22 were considered ethically strong, with the remaining 78 deemed average in terms of transparency and openness

*(ref: http://www.marketingmag.com.au/ as on 31st january 2013)

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