Corporate Social Responsibility (WU)

Compiled by:
Aleix Ferrer Duch (seecon international gmbh), Stefanie Keller (seecon international gmbh)

Executive Summary

Corporate Social Responsibility (CSR) is the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of society at large. It is about enterprises deciding to go beyond minimum legal requirements and obligations stemming from collective agreements in order to address societal needs. There are two ways of CSR partnerships: financial partnerships in which money flows directly, and non-financial partnerships in which technical inputs or products are distributed. By showing their corporate social responsibility, private companies in collaboration with development actors (such as NGOs) can contribute to making the water and sanitation sector more sustainable.

Introduction

Corporate Social Responsibility (CSR) does not have one particular definition. Some define it as operating in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business; whereas other define it as doing business in an ethical way that respects people, society and the environment”(NEPALI 2008).
CSR is the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by the business to behave fairly and responsible and contribute to economic development while improving the quality of life of the work force and their families as well as the local community and society at large (BRITISH COUNCIL 2004).
An important aspect of CSR is how enterprises interact with their internal and external stakeholders (employees, customers, community, NGOs, public authorities, etc.) on a voluntary basis. It is about enterprises deciding to go beyond minimum legal requirements and obligations stemming from collective agreements in order to address societal needs (COM 2006).
CSR generally refers to:

 

  1. A collection of policies and practices linked to relationship with key stakeholders, values, compliance with legal requirements and respect for people, community and the environment.
  2. The commitment of business to contribute to sustainable development (BRITISH COUNCIL 2004).

 

Main Components of CSR Related to SSWM

(Adapted from BRITISH COUNCIL 2004)
Regarding the water and sanitation sector, CSR can contain the following components:


1. Environmental Protection

The focus in this component is on finding sustainable solutions for natural resources use in order to reduce company’s impact on the environment. Over the past several years, environmental responsibility has expanded to involve substantially more than compliance with all applicable government regulations or even a few initiatives such as recycling or energy efficiency.
Regarding water and sanitation, a company can show its corporate social responsibility  for example by constructing improved and innovative wastewater treatment plants or sustainable sanitation as well as applying rainwater harvesting.


2. Human Rights

Business practices can profoundly affect the rights and dignity of employees and communities. The main focus is on developing workplaces free from discrimination where creativity and learning can flourish decent codes of professional conduct and where a proper balance can be maintained between work and other aspects of our lives.
Regarding water and sanitation, a company can show its corporate social responsibility by providing clean and safe sanitation facilities and adequate water supply to its employees in order to ensure their human rights (see also the right to water and sanitation).
 

3. Health Promotion

The workplace is now recognised as an important setting for health promotion. A company can promote adequate health standard by providing a healthy and safe work place for its employees and invest in health promotion in other projects implemented with development agencies.
Regarding water and sanitation, a company can show its social corporate responsibility by contributing to health promotion projects in partnership with development actors such as NGOs. These projects may raise awareness about the correlation of sanitation, hygiene and public health (see also health and hygiene issues.)


4. Education Development

As education is one of the key elements of sustainable development and pro poor growth, businesses, working together with the public sector or civil society can make an important contribution to providing an access to quality education of all.
Regarding sanitation and water, a company can show is social corporate responsibility by supporting development organisations in education campaigns and projects related to safe sanitation behaviours (see also school campaigns).
 

5. Human Disaster Relief

Companies, in cooperation with public sector, civil society and international organisations have played an important role in supporting humanitarian relief operations.
Regarding sanitation and water, a company can show its social corporate responsibility by supporting people in disaster areas with clean drinking water or sanitation facilities (see example about the partnership of Coca Cola and UNDP further below).

Main Actors Involved in CSR

The main actors are:

 

  • private companies willing to invest or implement CSR activities, probably through sponsoring, giving money so that their brand can be seen doing good things.
  • Known NGOs, which are directly or indirectly involved in the process, can be a connecting bridge between the companies and the local level. The NGO can also be a known reference to work with for the private company.
  • The implementing organisations at the local level will execute the SSWM project and benefit from CSR.

 

Communication between development actors such as NGOs and private actors is not easy since the languages they speak is different and this needs to be taken into consideration. One can also consider hiring professionals who understand both sectors and can therefore act as mediators. The private sector’s key objective is to earn profit whereas development sector thinks differently and its objective is to carry out social welfare activities. Even though these organisations speak different languages, there has been a shift over the last few years where both sectors are becoming increasingly interested in working with each other.

How Can the Development Sector Profit from CSR?

First of all, having a partnership with a company can help local communities or NGOs to get money for their local SSWM projects or other tools and knowledge to implement these projects. There are two ways of partnerships: financial partnerships in which direct money flows, and non-financial partnerships in which technical inputs or products are distributed. Since CSR has been linked to brand loyalty and increased consumer base, sponsorship can be one route to promote organisation's CSR.

Secondly, working with a known company can help the developing sector to gain credibility in their own community as well as in the international community. For example, working with Bottlers Nepal (Coca-Cola) the company has been supporting UN Habitat for potable water projects. Choosing the adequate company for your CSR partnership is of prime importance in order to achieve your objective. You can win credibility at the local level, but not necessarily at the international level. Therefore, the development actors need to clearly define their objective before entering a partnership with a private company.

Why is CSR interesting for Private Companies?

 sustainabilityblog.org

Caricature how some companies understand the term CSR. Source: TONIN (n.y.)

There are two main arguments why CSR are interesting for private companies:

There is the moral argument, where CSR broadly represents the relationship between a company and the wider community within which the company is operating. Examples are eco-marketing, changing consumer expectations, to educate them about environmental problems and to rephrase their expectations so that they take environmental considerations into account in their purchase decisions (SCHALTEGGER 2003).

Beside the moral perspective, CSR can be interesting for private companies out of economic self-interests. In today’s brand-driven markets, CSR is a means of matching corporate operations with stakeholder values and demands. Furthermore, CSR can lead to tax reduction benefits, which is also an important economic argument in some countries (CHANDLER 2004).

 

Working with CSR from the Developing Sector’s View

 

 ENPHO

UN-HABITAT Water for Asian Cities programme and Bottlers Nepal Limited (Coca-Cola) are set to instal rainwater harvesting system in historical ponds located in Kathmandu and Lalitpur districts. Source: ENPHO (n.y.)

For development organisations at a local level it is important to work on:

 

  • Been credible and transparent with their budget
  • Networking with bigger and known NGOs which might have similar interests
  • Persist on sending proposals to known companies

 

Some companies implement CSR activities but do not work in direct partnership with NGOs, clubs or community-based organisations. Companies usually argue that they need to invest too many resources to find a credible NGO to work with and do not charge high overhead costs. Therefore, it is usually easier for small local-level organisations to collaborate with an NGO rather than directly with a big known company.

 

Planning and Implementing CSR for Companies on a Local Level

The following steps need to be conducted when planning and implementing CSR measures:

 

  1. Identify the needs of your community concerning SSWM
  2. Involve stakeholders into this process by receiving proposals from different NGOs, clubs, schools or community based organisations
  3. Consider your budget after analysing the proposals and examining their authenticity. Set priority areas and the total budget to be spent on these activities (NEPALI 2008).

 

Important Steps before Starting a Partnership between Private Companies and NGOs

 

  1. In a first phase, a round of dialogue is needed; clarifying issues such as what the development organisation is doing, what their interests are in working with the private sector and how they think this can be achieved. Different stakeholders interested from the private sector and organisations working on water and sanitation issues should be included in the dialogue so that they can discuss on both pros and cons of the partnership. The dialogue will also lead to the areas where private sector would like to work and the mechanism in which they will feel comfortable.
  2. In a second phase, one should develop a good model for NGO-Private Sector Partnership. The model has to be developed in such a way where both private and development sectors will be interested. Furthermore, the character of the partnership as well as the implementing and monitoring part of the partnership has to be discussed.
  3. The final phase is to implement the project. This is normally done by local partners who can implement the project in the selected location. The partnership has to be constituted in such a way that both the organisations are involved from the planning process to monitoring and evaluation. The partnership should not be established and work in such a way that the private sector will only give money and the activities are carried out independently by development agencies. In case where a local partner is needed, they have to have a dual reporting system where they will report to the NGO and to the respective private sector. Also the monitoring and evaluation needs to be carried out by both partners.

 

Example of CSR within Water and Sanitation Sector

UNDP and Coca-Cola work together to rehabilitate water and sanitation systems in tsunami-affected countries (UN-Business 2006).

The goal of this partnership was to support the long-term reconstruction effort with a focus on sustainable, community-based water and sanitation activities in remote, tsunami-affected areas of Thailand, Sri Lanka, Indonesia and the Maldives.

The Coca-Cola Company and its bottling partners immediately used manufacturing capability for the large scale production of bottled drinking water and harnessed the distribution and logistics reach of its business system to meet the needs of local communities and various relief and government agencies in affected areas. Coca-Cola contributed just over US$1 million of its direct cash support to the United Nations Foundation, which, along with the United Nations Fund for International Partnerships helped to coordinate a partnership initiative with UNDP designed to build on the UN’s post-tsunami recovery efforts in the region.

The partnership is helping remote, tsunami-hit areas of Indonesia, Sri Lanka, the Maldives and Thailand to “build back better” by expanding community access to water and sanitation services and infrastructure.

Applicability

CSR should be part of a company business strategy, just as important as sharing the profit. Satisfying each stakeholder group (consumers, suppliers, employees, NGOs) allows companies to maximise their commitment to their investors. This important stakeholder group benefits most when the needs of these other stakeholder groups are being met (CHANDLER 2004).

It is essential to identify companies whose aims and priorities are related to water and sanitation. As mentioned before, even though there is an incentive to build CSR partnerships, the development sector and private companies speak a different language and they are not used to work together. Proper communication between both organisations as well as trust-building is necessary so that the effective partnership is initiated leading to the success.

Advantages

  • Brings money for SSWM projects from other sources
  • Through sponsoring, both partners get known
  • Can improve a firm’s image
  • Companies know that socially responsible actions can be profitable
  • Can be attractive to some investors
  • Can increase employee motivation
  • Can helps to correct social problems caused by the business

Disadvantages

  • If a partner with a bad reputation is chosen, this will affect the name of your organisation
  • It could be that costs will be passed on to customers, and that the company makes yet a larger profit
  • It could reduce economic efficiency and profit of a company
  • CSR can be a way for organisations to put on a “green guise”

References Library

CHANDLER, D. (2004): A Guide to Corporate Social Responsibility (CSR). University of Miami Ethics Programs. URL [Accessed: 17.04.2012].

NEPALI, N; SHRESTHA, R. (2008): Report on the Study of Nepalese Private Sector’s Involvement in Water and Sanitation. In: UN HABITAT Water for Asian Cities Programme Nepal. URL [Accessed: 23.04.2010].

SCHALTEGGER, S.; BURRITT, R.; PETERSEN, H. (2003): An Introduction to Corporate Environmental Management. Striving for Sustainability. Sheffield: Greenleaf Publishing Limited.

UN-BUSINESS (Editor) (2006): UNDP and Coca-Cola work together to rehabilitate water and sanitation systems in tsunami-affected countries. New York: UN-Business. URL [Accessed: 03.08.2010].

TONIN, P. (n.y.): Social Responsibility Cartoon. Somerset (UK): Cartoonstock. URL [Accessed: 26.03.2012].

Further Readings Library

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CHANDLER, D. (2004): A Guide to Corporate Social Responsibility (CSR). University of Miami Ethics Programs. URL [Accessed: 17.04.2012].

Why do businesses exist? What is the purpose of a business, or, in the bigger picture, any economic system? This guide to Corporate Social Responsibility tries to answer these questions.


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COMMISSION OF THE EUROPEAN COMMUNITIES (COM) (Editor) (2006): Implementing the Partnership for Growth and Jobs: Making Europe a Pole of Excellence on Corporate Social Responsibility Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee. Brussels: URL [Accessed: 03.08.2010].

CSR has become an increasingly important concept both globally and within the EU, and is part of the debate about globalisation, competitiveness and sustainability. In Europe, the promotion of CSR reflects the need to defend common values and increase the sense of solidarity and cohesion.


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CSR ASIA (Editor) (2009): CSR in Asia: the Real Picture. Lloyd’s Register Quality Assurance (LRQA). URL [Accessed: 24.09.2010].

This publication is aimed at creating awareness on the particular characteristics of CSR in Asia and points towards the challenges that businesses will have to deal with when operating in the region. As with other regions, CSR in Asia must address Asian challenges and the priorities of Asian stakeholders.


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FOLEY, P.; JAYAWARDHENA, C. (2001): The Stationery Office. Corporate Social Responsibility in the IT Industry. Norwich:

Nowadays, the internet has a profound effect on our entire daily lives, both in business and personally. The main aims of this research are to establish how much social responsibility is accepted by the information technology sector in this new digital age and to understand the strategies of the individual companies.


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NEPALI, N; SHRESTHA, R. (2008): Report on the Study of Nepalese Private Sector’s Involvement in Water and Sanitation. In: UN HABITAT Water for Asian Cities Programme Nepal. URL [Accessed: 23.04.2010].

This report is a comprehensive analysis of the data and information collected for the ‘Study on the Nepalese Private Sector’s Involvement in Water and Sanitation’. The main aim of this study was to understand the private sector’s willingness to partner up with development sector for water and sanitation issues as part of their CSR activities.


Case Studies Library

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NESTLE (Editor) (2009): Nestlé Creating Shared Value Report 2009. Lausanne: URL [Accessed: 17.04.2012].

Nestles annual report on their CSR activities, as a basis for responsible operations and business success over the long term.


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THE COCA-COLA COMPANY (Editor) (2009): Live Positively. Our commitment to making a positive difference in the world. (= 2008/2009 Sustainability Review). THE COCA-COLA COMPANY . URL [Accessed: 02.08.2010].

The company’s biannual report on their CSR activities is a fine example on how much companies are willing to invest into CSR and how it is used to work on the image of the company.


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CSR Europe (Editor) (2004): Covenant on Soil and Groundwater Sanitation. Government and Corporation Cooperating for a Healthier Environment. Brussels: CRS Europe. URL [Accessed: 03.08.2010].

Over 100 years of industrial activity has gravely polluted the soil around several Umicore sites. Today, Umicore wants to end the practice of passing on this inheritance of previous generations to the next and undertakes a large-scale sanitation project of the soil and groundwater on and around its four sites in Flanders.


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CSR Europe (Editor) (2001): Cleaning up the Brantas River, Indonesia. Brussels: CSR Europe. URL [Accessed: 03.08.2010].

Unilever Indonesia has a factory in East Java, 5km from the Brantas river. The river becomes heavily polluted from local industries as it passes through Surabaya. In 2001, Unilever 'adopted' four riverside villages and with local actors improved basic communal sanitation, created a household waste management process and introduced a 'greening' programme.


Awareness Raising Material Library

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HEIMANN, G (2008): Corporate Social Responsibility Global Standards & Policies in Practice. The Liberian International Ship & Corporate Registry. URL [Accessed: 03.08.2010].

This presentation describes the main dimensions of CSR as well as disadvantages and advantages.


Important Weblinks

http://ec.europa.eu/ [Accessed: 27.07.2010]

Corporate Social Responsibility (CSR) official link from the European Union (EU) for sustainable and responsible business. This website contains the main EU statements towards CSR.

http://www.csreurope.org/ [Accessed: 04.08.2010]

CSR Europe is the leading European business network for corporate social responsibility. Its mission is to support member companies in integrating CSR into the way they do business, every day.

http://www.csr-asia.com/ [Accessed: 04.08.2010]

CSR Asia is the leading provider of information, training, research and consultancy services on sustainable business practices in Asia. Operating as a dynamic social enterprise, CSR Asia occupies the unique middle ground between civil society organisations and fully commercial consultancies. Case studies and open sources literature are available on the site.